tag:blog.alchemistaccelerator.com,2013:/posts Alchemist Accelerator Blog 2018-06-21T18:45:54Z Alchemist Accelerator tag:blog.alchemistaccelerator.com,2013:Post/1295945 2018-06-21T13:48:16Z 2018-06-21T18:45:54Z Emotional Triggers and Investing

Directors like James Cameron, James L. Brooks, and Steven Spielberg are masters when it comes to understanding human emotion. In just a few short scenes, they can leave a whole audience in tears. They aren’t doing anything magical. They’re just appealing to the same human emotions we all have. As an Alchemist Accelerator Partner, I teach founders how to apply the same principles to fundraising. Get an investor emotionally excited and investment comes naturally. Try to beat them to death with numbers and figures, and you’ll just spin your wheels. Investors see thousands of pitches a year and fund a handful. If you want to win, you have to get them excited and snap them out of their default behavior of “no.”

Luckily for founders, investors are human too. So naturally, they have common emotional triggers that spark excitement, and ultimately, investment. In working with hundreds of founders, as well as raising $5.4million in seed funding for my own startup, I’ve identified eight emotional triggers nearly all investors respond to. By focusing on conveying these points to prospective investors, founders stand much better chances of raising capital and ultimately building great businesses.

The eight emotional triggers are:

  • Big Market

  • Rapid Growth

  • Why Now?

  • Unfair Advantages

  • Founder Strength

  • Founder Bond

  • FOMO

  • Confidence

Big Market

Investors live and die by their returns. The only way to get big returns is to invest in companies that have potential for big exits. For most investors, big market is a fairly binary measure: “Is the TAM (total addressable market) large enough to get me outsized returns on my investment?” they’ll be thinking. If the TAM is over $2B, you’ll get a check and if it’s less than $2B, they’ll likely have to pass—even if they really like you. So make sure you help your investors know exactly how big your market is by helping them do the math. If an investor is asking questions about how many customers are in your space or how big you think the market is, don't make them guess at the answers. Give them all the data they need to help them understand the TAM. This is especially important if there's a general perception your market may be too small.

Rapid Growth

The only thing that separates a startup from a small business is rapid growth. It’s literally the definition of a startup. The easiest way to demonstrate a rapidly growing company is to, of course, be growing rapidly, which typically means you’re adding users, customers, or revenue quickly. However, if you’re pre-revenue or pre-launch, growth projections can also help to convince an investor that your business is about to take off. If you've done the work in Excel to know you're adopting the best business model, now is the time to use it to convince someone else.

Why Now?

The why now question is really a two-part question of movement. Why has this business never been possible until now? What has changed now to make this business possible for the first time? After all, fresh ideas are nearly impossible so chances are others have come before you and failed. You need to explain what has changed that will make your vision succeed. Market movement creates opportunity. You see it. They see it, but only you know how your business can best seize the opportunity to create billions more for the benefit of both of your organizations.

Unfair Advantages

Investors recognize there are lots of smart people in the world, so becoming a successful company in a crowded marketplace requires more than just efficient execution. Describe precisely how you're creating a new earnings engine as well as any unfair advantages you may have. For example, if you have extreme domain knowledge around analyzing very large datasets or have worked in the industry you're targeting with your new product (e.g., healthcare), you should highlight that in your pitch.

Founder Strength

Building any successful company is hard. Building a multi-billion dollar company is nearly impossibly hard. When investors invest in your business, they can’t just believe in your idea. They have to believe in YOU. The best way to convince them is to show them a history of exceptional achievements. For example, if you have a new security technology, are you already an inventor holding patents or do you have a CISSP? Name drop. Make connections to your market. Mention achievements and show off logos. Be sure to share all of your founding team strengths.

Founder Bond

Co-founder conflicts are among the top reasons startups fail. It’s not talked about every day on TechCrunch, but investors see it all the time in their portfolios. So when a potential investor asks, “How did you and your co-founder meet?” he or she actually doesn’t really care about your cute story of growing up together and your mutual admiration of Pokemon. What the investor really wants to know is if you and your co-founder are committed to each other enough to stick it out through the ups and the inevitable downs of startup life. Founders who have bonded because they've known each other awhile often have an edge because (presumably) their relationship has already weathered some turbulence.

Fear of Missing Out (FOMO)

In the public markets, investors pay big money for the privilege of investing in stocks at a future date, at a current known price. It’s called option trading and it’s a multi-billion dollar market in the U.S. alone. In the private market, investors get “free options” all day by telling founders simple things like “We’re still discussing things internally” or “We’re still working through diligence items.” As a founder, it’s your job to move these maybes to real answers. The best way to do this is by appealing to what we all fear, which is missing out on something that might be amazing.

Confidence  

Investors are looking for founders with confidence. After all, if you aren’t confident in your own business, why should the investor be confident in your ability to make it successful? One of my fundraising mentors, Michael Carter, used to remind me, “It’s your job to be confident.” That haunted me during my own fundraising process, but it also provided a healthy reminder that confidence isn’t an emotion. It’s something you can project through tone, body language, and deliberate actions—even if deep down inside you feel anything but confident.

Emotion stays with us, making the discovery of the right human connection a significant factor in an evolving investment strategy. Talk. Uncover. Discover. Emotional triggers have the power to accelerate your funding success.


About Michia Rohrssen

Michia Rohrssen

Michia Rohrssen is the CEO of Prodigy, the fastest growing auto startup. He is also a founder/blogger at B2BFounder.com, providing actionable insights from a founder in the trenches. Before Prodigy, he served as Head of Growth at VentureBeat and CEO of Smarter Solutions. Learn more at https://getprodigy.com.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1291462 2018-06-08T04:00:00Z 2018-06-07T14:50:33Z Crossing the Chasm and Spinning Up the Web

Innovation has been difficult for traditionally successful companies. While leaders such as Intel, Oracle, and Microsoft spent time improving performance, entrepreneurial founders from Facebook, Google, and others moved in, creating new earnings engines by delivering faster and with less friction.

When I speak with Alchemist Accelerator entrepreneurs, I first describe the hierarchy of powers because it's how investors think about the origins of future growth. They want to understand how your company is going to win based on what power it will exert on the market:

  • Category power - Growth from category expansion where secular growth increases spending

  • Company power - Growth from competitive advantage (e.g., the 800-pound gorilla analogy)

  • Market power - Growth born from customer commitment and loyalty (think: Mac owners of the 1990s)

  • Offer power - Growth born from unmatchable offers

  • Execution power - Growth born from reaching tipping points

This last point -- reaching the tipping point -- is what founders delivering consumer technologies have to focus on just as business-to-business (b2b) startups have to put all of their energies into crossing the chasm. Each is a critical step to becoming a successful business or what accountants commonly refer to as a “going concern.”

Crossing the Chasm

When I introduced Crossing the Chasm in 1991, the idea of a technology adoption life cycle with different categories of enterprise technology buyers was novel. Now, most b2b founders recognize the value of aligning their businesses with innovators and early adopters (a.k.a. lighthouse customers).

At the same time, they realize reaching beyond those groups to the early majority is much more demanding, and can sometimes feel like a futile exercise similar to poor Sisyphus pushing his boulder up the hill. Yet when they find pragmatists, or what I refer to as a "bowling alley" group of users that share similar pain points, the business can successfully cross the chasm to “viable” and enter the tornado phase, when it seems everyone--from techies to Main Street conservatives-- purchase. After all, adoption is social, so the skeptics come along too, and that's when you have total assimilation.

Spinning Up the Web

Interestingly b2c companies don't cross a chasm, but rather spin up a motor with a variety of gears to generate a tornado. Two gears -- acquisition and monetization -- were what early investors questioned most. How were companies running experiments and based on results, tweaking accordingly. However, the other two--engaging traffic and enlistment behavior--have turned out to be longer-term predictors of success. “Spinning up the web” or a mobile app today requires viral engagement. When Net Promoter scores reach 9 and 10, you know you have a winner.

While not impossible, crossing the chasm or spinning up the web within a traditional business is hard because innovation can be distracting and require reassigning top talent. You, as an entrepreneur, can use their continued focus on performance to your advantage, executing on one of the framework powers to grow your business or be acquired by theirs. Getting traditional enterprises to effectively create new earnings engines is outlined in Zone to Win. For now though, startups like yours that can cross the chasm or spin up the web still have the edge.

About Geoffrey Moore

Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Mohr Davidow and Wildcat Venture Partners portfolios and established high-tech enterprises, most recently including Salesforce, Microsoft, Intel, Box, Aruba, Cognizant, and Rackspace. Moore’s life’s work has focused on the market dynamics surrounding disruptive innovations. His first book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early adopting to mainstream customers. It has sold more than a million copies, and its third edition has been revised such that the majority of its examples and case studies reference companies come to prominence from the past decade. Moore’s most recent work, Zone to Win, addresses the challenge large enterprises face when embracing disruptive innovations, even when it is in their best interests to do so. It’s time to stop explaining why they don’t and start explaining how they can. This has been the basis of much of his recent consulting.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1286848 2018-05-25T04:00:00Z 2018-06-06T20:18:59Z You Need Paying Customers, Not Free POCs, to Survive Your Fundraise

First-time entrepreneurs that are building an enterprise SaaS company and trying to raise money without having paying customers will typically find it difficult to raise capital. As an Alchemist Accelerator CEO mentor, I help founders understand this point as early as possible. If you want to survive, meaning close your Angel or Series A round to live another day, you must prove that customers will pay for a solution to the problem you are solving. That is table stakes in Silicon Valley.

Early Stage, SaaS, Enterprise Sales is Really, Really Difficult.

You don’t have brand recognition, customer references, case studies, engaging slides, or a fully functional product. And most technical co-founders do not have sales experience and would prefer to spend their time coding versus updating salesforce or talking to people.

Capital comes in two primary forms: paying customers and venture term sheets. Non-paying “proofs of concept” (POCs) are not customers. The Valley VC deal flow is massive so POCs with no path to revenue from small logos (companies with under 400 employees) will get a response that sounds like “come back in six months.” That is a major problem when you have only 90 days of cash and no salespeople.

Founders need to clearly understand their prospects’ buying and decision-making processes. Everyone knows your product is in beta, but you shouldn’t be giving it away for free. Founders need to know their worth and show the value of their products. It’s important to explain to early prospects that free trials equate to no funding to hire engineers to scale the product. Even worse, they lead away from a path to raise money.

Be honest with your first 10 potential customers. Let them know that you need a financial commitment from them and that they need to be a reference for potential investors. Listen carefully to their feedback when you make that ask. Do they have a budget to pilot new technologies? What are the barriers to your deal getting signed in the current quarter? Are they in the midst of a reorganization? Did a new boss just arrive? The signal will be high on your first call as to whether or not this lead has real potential. If a prospect tells you his or her company’s security assessment will take six months and the purchasing process another three months, believe that person and say thank you, don’t forecast them and then move to the next deal.

Your First 10 Logos Matter

Many founders sell into small businesses (20 – 400 employees) because they think the process will be easier. Logos matter and the first customers you attract are important. VCs call these lighthouse customers. They represent early market validation and big budgets. If investors have never heard of the logos on your traction slide, there’s little excitement to listen to your pitch. Similarly, if your first four customers are due to your friends or family network, investors will be

skeptical of your ability to cold call and introduce your new product/service in a compelling way outside of your immediate contacts. Remember VCs backchannel before they cut checks. They call their networks of lighthouse executives to get a sense of market needs.

Have A Path to Scale Early Customers

Investors will be interested in your traction. They know that your first few deals will be priced below market to get the relationship started. But you need to show them a path—how you are going to grow early customers from five-figure deals to six-figure deals. (In effect, showing now that you won your first deal to prove your value with one business line, how you will get the rest of the business.) Great founders set this path to scale at the earliest stage of deal. They do this by value setting at the beginning of the relationship.

So take the time to build a solid pipeline of customers not POCs. It’s easier to raise money when you have paying customers. Founders selling early-stage enterprise SaaS solutions should think in these terms: every $50K SaaS sales order should equal $300K in funding. If what you are selling has value, people will pay for it.

About Darren Kaplan

Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1281987 2018-05-17T15:29:12Z 2018-05-17T16:00:01Z Lighthouse Customers: Four Best Practices


A lighthouse is a great metaphor, symbolizing safe passage ahead. Throughout my career, I've associated it with really important customers because they're the ones that help safely navigate small startups into burgeoning businesses.

Lighthouse customers are similar to anchor tenants in a shopping center. Others follow their lead. Lighthouse customers are your company’s champions (and hopefully become members of your Advisory Council). Lighthouse customers support your vision and have tremendous influence on your product or service roadmap because they've committed to you and you've committed to them. You’ll have other customers, for sure, but these lighthouse accounts are the shining examples of your software and service in action. They’ll be your references to investors. They’ll speak to analysts and press. They are your showcases.

That said, they don’t all have to be from the same industry. However, they do have to share the pain points your business is solving.

When it comes to lighthouse accounts, here are four things I tell the Alchemist Accelerator startups that I mentor to keep in mind:

1.     You're forming a partnership that requires commitment on both sides.

2.     Find big names that can be “company makers.”

3.     A solid ‘how many’ rule of thumb is 1:1.

4.     Companies do change.

Both Sides Commit to the Partnership

In the era of subscription selling, it's more important than ever for you to have happy and satisfied customers. Lighthouse accounts provide an inside view into what prospects and customers really need and what your organization is doing (and can do better) to deliver.

For your part, your company will need to provide direct access to your CEO as well as establish a dedicated support team. Best practices with lighthouse customers include

·      Monthly check-ins between executives

·      Quarterly in-person, on-site meetings at either the customer or company location

·      Bi-monthly meetings with clearly defined action items by team

·      Weekly internal email updates about lighthouse customer progress

Recognizing the importance of these key accounts, some startups showcase lighthouse customer logos on their walls. Others host lunch & learns about the customers' businesses, hearing from champions, investors, influencers, and even media presenters.

But the relationship can’t be one-sided.

Lighthouses have to commit, too, meaning they should allocate executive access and provide significant input to your roadmap, but without too many absolute demands. There’s also financial equitability. Lighthouse accounts should pay for what they use, with the exception of possible discounting in exchange for specific marketing activities, such as quotes in press releases or speaking engagements at industry events. Remember, our companies charge customers for our software and services because nothing should be free when you’re providing a valuable service or product.

Find Big Names that Can Be “Company Makers”

Lighthouse customers should be well-recognized brands. It may not be widely known, but forward-looking companies across industries -- think Starbucks and Target, VISA and Mastercard, JPMorgan Chase and PNC, for example -- want to work with you as much as you want to work with them. Global giants stay ahead of competitors by finding ways and new technologies that improve processes, increase customer engagement, drive revenue, and reduce costs. If you have something that can give them an edge, they’re interested.

Association with a few big brands puts a company on the map. Lighthouse accounts not only open doors, they offer tremendous opportunities for the kind of high-scale growth that can make a company wildly successful. Teaming with the right internal champion can turn an initial 50-seat sale into an enterprise-wide deal.

1:1 is the Ideal Executive Ratio

Too many and there's no way to support them. Too few and you don't have enough feedback to improve your product/service nor investor references to continue building. Lighthouse accounts should be the best example use cases of your software or service, making them the most strategic to your company. That’s why each lighthouse account must have a company executive sponsor, leading the relationship to greater success. The ideal ratio for lighthouse accounts is one executive from your company to each lighthouse customer organization. That basically means if you have five execs in your company including the CEO, you can handle five total lighthouse accounts.

Embrace Change

It doesn't have to be the end of either business if a lighthouse customer relationship dwindles. Change is constant. Some companies advance faster than others and timing is everything. Should the bright light of one customer begin to fade, be sure to replace it with another. This goes for both startups and global Fortune 100 companies. There should never be a time when employees don't know the name of your company's lighthouse customers.

Lighthouse accounts help companies of all sizes, across industries, safely navigate forward. They keep teams innovative and competitive. Who are your company's lighthouse customers? It's important for you and everyone else in your business to know.

About Kris Duggan

Kris Duggan is an entrepreneur, advisor, investor, and educator. He's advised and invested in a variety of Silicon Valley-based companies, including Palantir Technologies, RelateIQ (acquired by Salesforce.com), Addepar, Blend Labs, Turo, and Gusto. He co-founded and was the founding CEO of Badgeville and BetterWorks before co-founding a new technology company, based in Palo Alto, CA, this year. Kris is the Chief Sales Mentor at the Alchemist Accelerator. He previously served as an Adjunct Faculty for Singularity University, and is a frequent speaker on the topics of scaling startups, customer loyalty, gamification, employee engagement, and performance management.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1282723 2018-05-12T07:04:46Z 2018-05-31T20:18:42Z What’s HQ (Hustle Quotient) And Do You Have Enough Of It?

Hustle isn’t just the difference between good and great: for start-ups, it’s the difference between existence and non-existence, between “good enough” and “gone”. Companies in an industry will experience roughly the same degree of luck. Hustle is what makes the most out of good luck and sidesteps and perseveres through the worst luck. HQ, your Hustle Quotient, is how effectively you leverage your IQ and EQ. Hustle is a resource available to all, and this article explains 6 ways to increase your startup’s HQ. The article also explains the interaction of HQ with social, financial and human capital; and in what way HQ supports anti-fragile companies. Concepts are illustrated via examples from history and industry.

In my experience, one factor — a factor available to anyone — opens the door to success for startups: Hustle — the difference between existence and non-existence. Hustle has to be your guiding compass.

Your organization’s HQ, its Hustle Quotient, measures your perseverance and resourcefulness. HQ is how effectively you leverage your IQ and EQ.

It’s not new. Here’s a life-and-death example of HQ outside the realm of this century’s technology startups.  More than 100 years ago Amundsen and Scott led two separate expeditions in a race to be the first to reach the South Pole. Presumably, their goal was to also return from the expedition.  Amundsen reached the pole first, and he returned with every member of his expedition. Scott and his entire team perished and likely did not reach their goal. The difference in outcome — existence vs. non-existence — boils down to hustle.

Amundsen insisted on 20 miles a day, no matter the conditions, and he never went more that 20 even in great conditions. Scott rested on bad days and covered as much ground as possible on good days. Both teams had roughly the same conditions, but their outcomes were vastly different. Amundsen covered twice as much ground — returning from the expedition. Existence vs. non-existence.

Amundsen had broad contingency plans — literally. He carried three times the supplies that he calculated were needed, and he marked the caches with a 10km band of flags so he wouldn’t miss them. Scott carried the exact amount needed, and planted a single flag for each. Amundsen’s team was fed; Scott’s experienced starvation. Existence vs. non-existence.

Amundsen researched how the Inuit lived in order to understand the problems he would encounter. Scott knew how to use horses, so he used horses—which were not able to survive the conditions.

Three HQ lessons from these expeditions:

  1. Persevere through periods of bad conditions
  2. Contingency plans enable you to persevere
  3. Understand the problems before you choose your solution

A start-up adventure has striking similarities to the Antarctic expeditions, though not that fatal consequences of failure. There are many unknowns, but a bright north star: becoming a billion-dollar company. Startup companies have, on average, similar resources and luck. Hustle is what you make of the good luck, and how you persevere during the bad. Contingency planning gives you the backup you need to survive when the goal takes so much longer to reach than you expected, to endure during the bad luck, and as you navigate the unknowns. In a startup, you can’t dream in a vacuum — you have to address how to solve a real problem. Just as Amundsen created solutions correct for Antarctic conditions, startups must understand the market needs, headwinds, and pinpoints. Outcomes are also similar: existence or non-existence.

Here’s a Hustle example from the technology world: Imagine Larry Page steps on the elevator with you. You could be immediately star-struck and ask for an autograph, while expressing admiration for his accomplishments. Or you could engage him in a conversation that shows off your chops: “BTW I was at the GoogleNext conference last month, and it brought home to me that Google is really giving AWS a run for the money.” Larry is now compelled to say, politely, “Oh, thanks. So, what is it you do (that brought you to the conference)?” You use your HQ to deliver an answer gets his interest, and he agrees to connect with you. Now, although you don’t have an autograph, you do have potential to establish a relationship with Google. This IQ leveraged by hustle.

Anyone and any organization can have hustle. It is a renewable resource with no marginal cost.

So how do you get that hustle, or evaluate your HQ?

  1. Force yourself into uncomfortable situations, outside your comfort zone. Such as promoting your company even when it feels unbearably awkward.
  2. Work on things that truly move the company forward. For example, making 20 prospect calls. You’ll probably have to be uncomfortable — overcoming the feeling of failure that prospecting often brings, which is really overcoming yourself.
  3. Hire people with high HQ. Make HQ central to the interview. What have you done outside your comfort zone, or that’s risky, or leaps into the unknown. You must hire the hustle mindset and behavior, not the job skill set.
  4. Create a culture of tinkering. The route to success is faster if you try over and over, experimenting and learning until you find solutions.
  5. Create options where none exist. If you are prospecting, and get no response, what do you do? High HQ  people brainstorm on how to get a response. Who else could reach my prospect? How can I get near my prospect? How can I create more prospects?
  6. Do not accept binary outcomes. You reached your prospect and delivered your most persuasive arguments, yet you got turned down. Don’t react as if the outcome is Yes or No. You got a No to your offer, so now you ask  “What happened? Why not? What would have led to Yes? Who do you know who might want to use us?” Answers to any of those questions put you far ahead of where you were after No.   

High HQ teams make more of their startup capital. Startup capital is the combination of your social, human, and financial capitals. Financial capital is your buffer for hard times. Human capital is the skills and experience you collectively have. And social capital is your network in the industry you are in. Hustle makes you assess what you can do with your capital. How many people in cloud computing do you know, or how many people in your network know people in cloud computing? What are the gaps in your network? How will you fill those in? Our human world operates within clans or tribes. Hustle is identifying groups that are critical to your success, making sure you invest time and energy in becoming an integral part of them and using them effectively.

As you apply your elevated HQ to your organization, keep your scope broad. Company building is not product building. Product is only one of the variables to manage. The others include finance, advisors, investors, co-founders, talent customers, legal, HR, and partners. Some of these you can select based on their HQ. Some, like co-founders, advisors, and partners, will complement what you do, filling in for your organization’s gaps. It’s all about existence or non-existence.

This manifesto is a result of my constant research into what drives success.  I’ll share my reading list with anyone who reaches out to me.

About Asim Razzaq

Asim Razzaq is the co-founder and CEO of YotaScale. Prior to YotaScale, Asim was Senior Director of Engineering at PayPal and eBay. He built and ran the PayPal cloud infrastructure and his engineering teams made significant innovations in the area of manageability and system administration. He helped build the PayPal Developer Platform from zero to a billion dollars in payments volume. Asim was also responsible for all core infrastructure at PayPal processing 5 million transactions per day. He has lead engineering for multiple early and late stage startups in Silicon Valley and Austin with two of the companies exiting to Netsuite and Navitaire. 

Asim co-founded YotaScale to bring his expertise in large scale, mission-critical, cloud infrastructure management to companies beginning to use cloud services as well as those that are well on their way.

Asim holds a BS (Honors) degree in computer science from the University of Texas at Austin where he conducted research in distributed computing and large scale infrastructure sponsored by IBM Research. He is a published author in the field of computer science in the area of resource management for large scale, distributed systems.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1281660 2018-05-10T14:53:56Z 2018-05-10T16:00:03Z Demo Day Advice - From a VC Turned Entrepreneur

Entrepreneurs - congratulations on approaching Demo Day!  You'll soon be surrounded by interesting people, inundated by emails, and distracted by countless potential conversations that you'll need to prioritize carefully.  Based on several years of experience and more than a handful of “Demo Days”, including the Alchemist Accelerator’s, here are a couple of tips I hope you’ll find useful:

1)  Remember that 5 Minute Demo Day presentations are NOT enough time for listeners to decide whether to invest or not.  Your goal for the Demo Day presentations, therefore, is to attract the attention and trigger the NEXT CONVERSATIONS with the individuals in the audience that could be the best sources of feedback / investment ($) / advice / or customer introductions.

  • Sometimes all of these dimensions happen at once, usually feedback and "advice" happens first as a precursor to investment or introductions.
  • None of these dimensions, however, will happen if the listener (for whatever reason) decides they are not interested in having a follow-up conversation.
  • If you think someone or some firm could be a good fit for you, then be proactive in getting their attention.

2)  The demo day presentations are only 5 minutes, if not shorter!  The short format requires you to present in "broad brush strokes" that capture the most important highlights.  Prioritize what content to present and what details to highlight most efficiently.

  • Sometimes the slides you create for "full" 30/60 minute conversations with investors are good ones to reuse.  More frequently, it helps to edit and consolidate top-level takeaways or "aha moments".
  • Pay special attention to feedback from listeners who are hearing your pitches for the first time, domain experts who know your space, and non-experts who don’t know your space.  Each of them will give you different types of feedback, and you'll need to decide who to optimize for carefully.

3)  From my experience as a VC and angel investor, the most important questions to address within an abbreviated Demo Day pitch to trigger follow-ups from the right prospective investors are as follows:  
a.  Why now?

  • Compelling answers to this usually involve something significant changing in the market, with new/different customers or pain points that are growing, or new technology breakthroughs enabling problems to be solved, or something else encouraging different behaviors (such as government regulation or customer psychology).  
  • All of you are smart and talented.  Articulate (in simple terms to someone who is not an expert in your field) why you are excited and passionate enough to be dedicating your life to your companies right now.

b.  Why you?

  • The big opportunities and major inflection points across industries will be discovered by several, (usually many) different teams. What makes your insights unique or authentic?  
  • What experience or exposure do you have to the domain?  Have you or your co-founders been entrepreneurs before, or have you had other exceptional experiences in your life that will make you succeed when others give up?

c.  Target Market.

  • What subset of the market and subset of customers are you going to start targeting first, and how big can that "slice of the pie" get as you grow your product / team / business?  
  • Most VC's focus and talk about Billion dollar markets because its difficult to build large businesses in small markets, but it's rare that new products and new companies can target actual Billion dollar markets from the start.  Usually, whether limited by feature set, market awareness, or geography, most startups have to start by focusing on small pieces of big markets to grow into bigger markets and bigger companies.
  • I prefer to see a tighter focus and deeper understanding of smaller markets as precursors to bigger / quickly expanding markets rather than claims to HUGE markets that are crowded with competition or demonstrate lack of focus or deep understanding of target customers.

    d.  Product (or service). What are you building, creating, or enabling?

    • A single sentence that clearly articulates (again in simple terms that someone who is not an expert in your field can understand) is best.  That single sentence will keep evolving, and it will require more detail when you explain it to people with domain expertise. Even so, you should aim to distill the core trajectory of your company into to a single sentence that can be remembered.
    • What signs of customer validation, or market adoption, or business potential do you have?

    e.  Differentiation. What is defensible now and into the future?

    • What is the strategy for expanding, and what will become the more UNIQUE and compelling dimensions to your product offering vs. inevitable competition?
    • Are you 2x better or 10x better than the alternatives? Across what dimensions and subject to what assumptions?

    e.  Business Model.

    • At the seed stage you don’t need to have the world’s most comprehensive business model, nor a combination of 3 different business models.  You do, however, need to have some ideas on how you might start to capture the value or benefits that you provide.
    • Again, what signs of customer validation or business potential do you see? Deep understanding of how much customers are paying for alternatives, or inferior solutions, or notable competitors in the market are good proxies.

    Overall, strong Demo Day presentations usually weigh heavily towards addressing <Why now> + <Why you> + <Target Market>, with lighter treatments of <Product> + <Differentiation> + <Business Model> (due to time constraints).  Follow-up conversations, and deeper diligence from potential investors will go deeper into the areas of <Why you> + <Product> + <Differentiation> + <Business Model>.
    You can identify individuals/VCs who are a better "fit" for you on the basis of how well they already understand <Why now> + <Target Market>, and how deep they can dive into discussing the other areas. Individuals/VCs who don’t already share your opinions regarding the <Why now> and who don’t ask thoughtful questions about the other areas are usually dead ends, or will require a lot of time to be convinced.
    4) Have fun and stay positive!  Prioritize your time and scheduling of follow-up conversations!  The Demo Day pitches and many conversations that will follow are a unique and special time for you as entrepreneurs.  Build relationships, follow-up with the most relevant potential sources of advice or funding. Don’t let the many NOs and frequent radio silences you will encounter discourage you from progressing up the paths you are on.  You are privileged to see opportunities where others are blind, and courageous to climb routes that others are too scared to explore.

    Onwards!
    About Luis Robles

    Startup advisor & Angel Investor, Blockchain enthusiast, Experienced Company Builder & VC Investor (previously @ Sequoia Capital). Co-Founder, VP Products & Marketing at Diamanti. Knowledgeable about enterprise businesses, datacenter infrastructure, cloud computing, distributed + open source software, big data, IOT. Senior Product Manager and early engineer at VMware. BS and MS degrees in Computer Science from Stanford + an MBA from Harvard.
    About the Alchemist Accelerator
    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1277219 2018-04-26T16:07:43Z 2018-05-04T20:17:22Z Customer Advisor Board: Early-Stage Hack to Getting Your First Customers

    As a founder and former CEO, I'm delighted to see so many Alchemist Accelerator portfolio startups executing highly engaged Advisor Councils (AdCos) when acquiring their first 10 paying customers. Yet most startups fall short of scaling their AdCos beyond a few influencers and MVPs. This is a critical mistake.  

    Active AdCos drive you to deliver more customer-focused products while creating momentum in the form of champions, stakeholders, thought leaders, communities, and loyal customers. Think of your AdCo as part of your startup's secret sauce, helping you scale quickly from Council (10-50 people) to Community (50-100 people) to User Conference (100+ people).

    As you embark on your customer development journey, an AdCo can serve as an enticing carrot to attract smart and talented individuals with the pain points you've outlined. Joining an AdCo comes with personal and professional perks—from new skills development to high-quality peer networking. Those joining AdCos recognize these benefits, but they'll become your first customers for two additional reasons: first, they really want the product you're working hard to deliver, and second, they want to help you succeed (and have funding to budget to do it).

    Qualifying early AdCo members is important. You want individuals that are

    • Thought leaders with deep experience and knowledge about the problem you are working to solve

    • Open and willing to co-build a solution with you

    • Able to access budget and have decision-making authority to buy

    Prioritize Your AdCo

    There are benefits across the business to establishing and scaling your AdCo:

    1. Product: Ongoing customer-focused product feedback

    2. Sales: Demand Gen (SQLs) of qualified leads and referrals

    3. Fundraising: Venture capital (VC) due diligence during your current or next round

    Product: Build WITH Customers Not FOR Customers

    AdCos instill a customer-first mindset while providing a critical product feedback loop. Product decisions and team scrum/sprints shift from sharing “I think” to “they said, they want, and they need” inputs.

    Data and insights from your AdCo need to be meticulously recorded and then shared “in their words.” At hiQ, we always found the devil was in the details. You should plan for your AdCo members to spend a full day alongside your engineers, data scientists, and product team members in structured round tables, breakout sessions, and panels.  

    Power tip: Host your AdCo meeting at a Council member’s location. Enterprise companies have conference rooms that can seat more than 20 people, and often, the organization will provide the drinks and snacks.

    Sales: Advisors Become Champions, Then Customers

    Your AdCo is one of the tools in your demand-gen and pre-product sales arsenals, and a measurable outcome of establishing one. AdCo members need to be in your sales pipeline as they move from Advisor to Champion to Customer to Reference and Referral. You'll be able to quickly qualify which Advisors will become champions and customers. They're the ones that will write the internal business use case for budget approval because they can’t live without the product(s) you are building. They'll be the ones standing on stage next to you when you officially launch.

    Power tip: Use a pending AdCo meeting to close a late-stage deal. Prospects enjoy talking with customers before they sign, so have them sit next to each other.

    Fundraising: The Best 2 Hours VCs Spend on Due Diligence

    AdCos will scale with your customer growth, and VCs will notice. VCs think in terms of product market fit. This is validated when they walk into a packed ballroom full of clients, prospects, analysts, and job applicants—all wanting to be part of what you're building. There's no better and bigger moment for you and your employees then having customers on a main-stage talking about your product and how it saves them millions of dollars.

    Power tip: Invite VCs to Council meetings as soon as possible. Their calendars book up a few weeks out.   

    About Darren Grant Kaplan

    Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1274419 2018-04-19T15:24:45Z 2018-04-19T16:00:04Z The Key to More Sales: Focus on Your State

    It's not the product. It's not the timing. It's your body language and tonality. Both have more to do with sales success than other factors because at the core, sales is result-driven communication.

    I've been leading sales organizations for more than a decade. However, when I speak with entrepreneurs as an Alchemist Accelerator mentor, I’m reminded that although not everyone is employed in sales, at different times, we all sell—to potential investors, co-founders, employees, partners, and perhaps, even family members.

    Your State Matters

    Take a minute. Consider how you feel right now. You should care about your state of mind because it’s influencing the work that you're doing and the effectiveness of your communication (i.e., your body language and your tonality). You need to ensure your mood is making a positive impact, helping you achieve what technical professionals call flow or being in the zone. This is your peak state, and it affects the results that you want. It heightens your performance. The opposite is also true. If you are in a bad state, your performance dips, you communicate poorly, and you make mistakes.

    A few months ago, I went to a demo-day event where a number of founders were pitching their products to a large audience. After noticing a disturbing trend in a few sessions, I did a little experiment. What I observed was this: at the start of every presentation, attendees sat up, ready to listen. But by the two-minute mark, most attendees lost interest and were looking at their laptops or phone screens. The presenters were dull. Some lacked energy, others lacked enthusiasm, as they pitched their products.

    One presenter was different. He started with high energy. He sounded passionate and engaging. Attendees looked up from their screens and listened. He asked questions, and they paid attention. Yet within a few minutes, his energy dipped and he lost them. The attendees went back to their devices because he couldn't maintain his state.

    I spoke next, determined to engage the audience’s attention through the entire session. My product wasn't any better than the others being presented, so I knew my communication needed to be different. I took a moment to get myself into a peak state. Then I made my pitch with a powerful and palpable energy. I was loud and enthusiastic. I moved around the stage, and asked a ton of questions. Above all, I maintained intensity during my entire talk, and I paid careful attention to the results.

    Throughout my session, the vast majority of the audience was attentive and engaged. I had five times the number of questions about my product than any presentation before me, and at the end, a number of attendees came by to meet me in person. My pitch was successful, and it had very little to do with the product I was introducing.

    The secret to a successful sales pitch is more than the initial spark—it's sustained energy and enthusiasm. If you can achieve peak state, getting into the zone, you communicate better. Your body language and tonality automatically attracts people and significantly enhances your influence over them. If you can consistently attain this state, you can consistently elevate your performance above the norm.

    Two Simple Ways to Master Your State

    There are two simple steps you can take to very quickly make a meaningful difference in the result of any communication:

    1.     Hack your brain

    2.     Hack your body

    What is hacking your brain? In effect, it's an exercise to change your state. You hack your brain before a big pitch by taking five minutes and focusing your thoughts on these things: (Hint: It helps to write them down.)

    • Think of one thing you are truly excited about today. If it's a thing, imagine receiving it right now or if it's an event, imagine it taking place right now. Focus on how you feel.

    • Think of one thing you are truly thankful for in your life? Take a moment to appreciate that feeling.

    • Think of one person you are thankful to have in your life? Take a moment to consider why.

    When you hack your brain, you put it in a different mood. You replace negative emotions with positive ones—excitement, thankfulness, and appreciation—and those excrete the chemicals that get you closer to your powerful peak state.

    Hacking your brain isn’t enough. You need to hack your body in a similar way because emotions and your body are connected in a profound way. If you change the state of your body, you change the state of your mind and vice versa. As Tony Robbins often says, “motion creates emotion!” Doing any form of exercise (e.g., fast-paced walking, running, dancing, or even some jumping jacks) can influence your mental state and put you in the zone. With the right mental state, you'll start to notice that your communication and body language improves. You do better things and you do things better. Sales is one of those things.

    After hacking your brain and your body, you feel better. Your body language automatically improves, and your tonality matches your positive, confident, and empowered emotions. At this moment, you have the best chance to influence others through your communication.

    Achieve Results

    Your body language and tonality are what people use to interpret what you are saying. It’s not what you say, it’s how you say it that matters. Frame of mind and tonality are the reasons two sales people using the exact same script, answering the same questions, can have very different results.

    The next time you're ready to make a cold call, close a deal, pitch to investors, or present in front of an audience, pay attention to your state. If you’re not in a peak state, take a minute to hack your brain, then hack your body. You'll be glad you did.

    About Kevin Ramani

    Kevin is the Head of Sales at Cobalt Robotics, and was one of the founding team members of Close.io, helping to build the company from the ground up. Kevin is also a startup advisor and a mentor to several Silicon Valley startups. Connect with him online.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1269490 2018-04-12T16:00:00Z 2018-04-13T05:50:38Z Funding Basics: Fundraising 101

    If you’re unfamiliar with how venture capital funding works, it can seem akin to playing the lottery. Anyone can try, but only a few lucky entrepreneurs actually win. Fortunately, fundraising isn’t as random as a Powerball drawing and founders can improve their odds of success by engaging with right-size partners, recognizing what investors find intriguing, and understanding the technical aspects of term sheets.

    How do I know?

    I was a VC.

    Establish a Strategy

    As an Associate at Draper Fisher Jurvetson and now as Founder of the Alchemist Accelerator, I’ve met hundreds of people with good ideas and great demos, but far fewer with a strategic plan for fundraising. Founding teams can save time (and alleviate stress) by researching fund sizes and prioritizing meetings based on the outcome they expect. Founders and the venture capitalists they choose will need to make the economics work. Investors will need to pay back their funds. A rule of thumb is that one out of every 10 investments in a VC portfolio will drive outsized returns. And a typical fund has 30 investments. So 3 companies in a given VC fund portfolio will likely be responsible for the fund’s performance. Given this, most investors want to see a path to paying back at least ⅓ of their fund size with an individual investment.

    Investors are also constrained by the number of investments they can make. Because they have to limit the number of board seats they take on, they often can only make 2 or 3 new investments per year. And each investment has to deploy enough capital for them to deploy the cash in the fund. For these reasons, investors at large funds (e.g. funds that are $300m or larger in size) will care much more about whether they have enough ownership in your company to create an exit to pay back their fund than the check size of your investment. In fact, if you are asking for too little money (e.g. less than $3m) it can be more difficult for that investor to justify the investment given the size of their fund and the limited number of new investments they can make each year.

    Ideally, founders approach a mix of VCs during the fundraising process, recognizing that there will be more traction with those that are a good fit. Don’t get too excited about meetings because every firm will want to meet for fear of missing the next big thing—think Google! That’s why it’s important for startup teams to have a plan.

    Choose to make scarcity of supply an asset. Optimize for a short, yet intense fundraising process. Establish a list of three dozen firms, then agree to pursue 12 active discussions at a time—segmenting top-tier / second-tier VC firms, angels / high-value investors, and corporates / strategic investors into separate thirds. This will enable the rapid replacement of non-responsive firms, and help ensure the arrival of term sheets at the same time.  

    Share Your Story

    VCs meet (and subsequently) invest in startups for a variety of reasons. The startup meets all of the criteria of previously proven successful companies in their portfolio; the startup is somehow connected to the VCs personal network that she trusts; or the firm likes to make contrarian bets. Whatever the reason, the dance between startup and VC always begins with a presentation.

    During a seed or series A round, fundraising meetings focus on the idea and its potential. In series C and later rounds, VCs spend time evaluating the idea, the market, and results. How has the company executed to date?

    Early round fundraising presentations are expected to be lean, including a brief overview of the team and the market potential. A dozen or fewer core slides is ideal, coupled with a large appendix of slides that goes deeper into specifics. An overview of capabilities and a product demo will also be expected. Sequoia Capital has a good template for creating solid fundraising presentations.

    But wait... Before presenting, stop, summarize how and why you are there (don’t forget to mention explicit connections). The goal of this is to try to address from the top the two fundamental questions wrestles with: “Are you any good?” and “If you are so good, why are you talking to me?”. At the beginning -- from the top -- you want to signal strength (that you are in fact a company the investor should want to chase), and that you are talking to them because of some privileged access that investor has. For example, “Before I begin, let me just set some context. As you may know, we have been heads down with customers and will be beginning our official raise next quarter. Our attorney XXX spoke very highly of you and recommended we get your guidance in advance of that”.

    You then want to unearth any biases upfront the investor may have before you go into your pitch. VCs often provide the best feedback before you speak. This time is also the best chance you have of understanding any bias or concerns VCs may have about differentiation, distribution, market factors, or some other issue you’re going to cover.

    You can simply ask “Did you have a chance to review the information I sent over?” They may not have, but if they have, you can invite them to share what’s important to them upfront so you can cater your talk better to them.

    At the end of the day, VCs want founders to like them and VCs want to like the founding team’s energy and passion. After all, funding is a long-term commitment (typically 3—7 years). Additionally, potential investors want to be sure the market opportunity is large enough and that a startup’s entry point is specific enough to ensure a big return.

    About Ravi Belani

    Ravi Belani is Fenwick & West Lecturer of Entrepreneurship at Stanford University, and Managing Director of the Alchemist Accelerator. Ravi formerly spent six years as part of the investment team at Draper Fisher Jurvetson's Menlo Park global headquarters, where he led investments and served on the boards as the first institutional investor in companies such as Justin.TV & Twitch (acquired by Amazon for $970m), Pubmatic, Vizu (acq’d by Nielsen), and Yield Software (acq'd by Autonomy). Ravi formerly worked in product management at two Kleiner Perkins enterprise startups, and as a consultant in McKinsey and Company's San Francisco office. Ravi is a Phi Beta Kappa and Tau Beta Pi graduate of Stanford University, holding a BS with Distinction and MS in Industrial Engineering. Ravi also holds an MBA from Harvard Business School.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the third in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1266000 2018-04-05T14:20:25Z 2018-04-05T16:00:07Z How One Hour of Customer Development Saves Five Hours of Coding

    The greatest expert on your customer is: your customer.  I consider that rule number one on any customer development journey.

    Over the years, I’ve discovered one of the biggest mistakes tech entrepreneurs make is overbuilding. Teams get so excited about an idea that they create feature after feature, hoping one of them will help someone, somewhere, soon save time, spend less, or be entertained.  

     

    Getting to Data-Driven

    The reason I wrote Lean Customer Development to stop teams from building things that people don’t want. That’s what successful customer development does for you - allows you to avoid (some) mistakes and focus on building what your customers will use, love, and buy.  You see, no matter how smart people are, no matter how well they know their industry, they’re wrong at least half of the time. That means about 50 percent of what is built is wasted effort!

    In my experience, every hour spent on customer development saves an organization five hours of design and coding time. That’s my conservative estimate. It’s probably closer to 20 hours.

    One of the reasons teams overbuild is because humans like to do what comes naturally. We like to build! We love coming up with solutions (that’s why we join product teams and start companies). But if you’re just starting out, you have to embrace what comes a little less naturally—and that’s listening.

    Following a Proven Process

    Start with a hypothesis. Ask the right questions. Make sense of the answers. Then figure out what to build based on the input. Those are steps to successful customer development, yet not everyone follows them.

    Teams often lead with their own product - a solution created based on assumptions of who’ll need it and why. We don’t create a narrow, unbiased hypothesis that focuses on the person, the problem, and how we can make their life better. This is ineffective for a couple of reasons.

    First, it puts you in the role of the expert when you really need to be learning from your prospective customer. Second, once you show someone a solution, that’s what they’ll talk about. Rarely does the person you’re talking with stop and say, “wait, I don’t really have that problem” or “hold on, I’m not motivated to change my behavior over this”.  When you start with a solution, you risk hearing a lot of “polite maybes” instead of uncovering the “here’s what I really need” answers that lead you to a successful business.

    Getting Input

    As an Alchemist Mentor, I encourage founders to start with one testable hypothesis.  For example, “I believe [type of person] has [problem they need to solve] in order to [experience this benefit]”. There are three segments to that hypothesis, and each of them can be invalidated - you might be talking to the wrong type of person; they may not have the problem you expect; they may not see that a solution will make their life better.

    There may be multiple stakeholders - for example, if you are trying to develop a solution to improve patient compliance in taking their medicine, you’ll likely need to talk to the doctors who prescribe medication as well as the people swallowing the pills. By understanding the behaviors, motivations, and constraints of all your stakeholders, you’ll be better able to design a solution that they’ll actually use and benefit from.

    Abstract up a level: more general, “storytelling” questions about the ways people do their jobs, what they buy, and how they use products give you more informative answers than yes/no questions. For example: What frustrates you about your job? How is work done in your organization? How do you evaluate solutions? Open-ended questions like these give customers the power to talk about what matters most to them. At the end of the discussion, don’t forget to inquire about what else you should have asked.

    I prefer one-on-one conversations: in-person is great, because you can see the customer’s environment - but phone conversations are often far easier to schedule and conduct. The best customer development method is the only you’ll actually do!

    I’m not a fan of focus groups. It seems far more efficient to talk to multiple people at once, but participants may not openly share in a group for fear of sounding dumb or having an idea dismissed.

    Depending on your hypothesis, you may easily find people in your extended network or a community online. (When people ask, ‘but how will I find people before I have a product to show them?’, I ask ‘but how were you planning on finding people after you have a product?’)  Sometimes you’ll need to pay for access to the right people through services such as LinkedIn InMail or user research firms, but generally you’re better off investing the time to figure out where your prospective customers ‘live’, online or offline, and making yourself part of those spaces.  You’ll need to build that trust eventually, so you may as well start in the early phases of your company!

    Making Decisions

    No matter how you discover customers, approach each conversation as a listener, not an expert.  I often recommend telling people explicitly, “I want to hear from you - I’m going to try and talk as little as possible.”  That’s the valuable data you need to inform your decisions. Whether you’re building your first product or rolling out a new feature, test everything. Customer discovery that’s about them, not you, is how to ensure your startup builds something people actually want to use and will pay money to buy.

    About Cindy Alvarez

    Cindy Alvarez is the author of Lean Customer Development: Building Products Your Customers Will Buy and Director of User Experience for Yammer (a Microsoft company). She has over a dozen years’ experience leading design, product management, user research, and customer development for startups, and is currently using that background to drive intrapreneurial change within Microsoft. She tweets as @cindyalvarez.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1265986 2018-03-29T14:54:34Z 2018-03-29T16:00:04Z Do Pivots Matter?                                                               There’s a sign on the wall but she wants to be sure
                                                               Cause you know sometimes words have two meanings
                                                                               Led Zeppelin – Stairway to Heaven

    In late 2013 Cowboy Ventures did an analysis of U.S.-based tech companies started in the last 10 years, now valued at $1 billion. They found 39 of these companies.  They called them the “Unicorn Club.”

    The article summarized 10 key learnings from the Unicorn club. Surprisingly one of the “learnings” said that, “…the “big pivot” after starting with a different initial product is an outlier. Nearly 90 percent of companies are working on their original product vision. The four “pivots” after a different initial product were all in consumer companies (Groupon, Instagram, Pinterest and Fab).”

    One of my students sent me the article and asked, “What does this mean?”  Good question.

    Since the Pivot is one of the core concepts of the Lean Startup I was puzzled. Could I be wrong? Is it possible Pivots really don’t matter if you want to be a Unicorn?

    Short answer – almost all the Unicorns pivoted. The authors of the article didn’t understand what a Pivot was.

    What’s a pivot?
    A pivot is a fundamental insight of the Lean Startup. It says on day one, all you have in your new venture is a series of untested hypothesis. Therefore you need to get outside of your building and rapidly test all your assumptions. The odds are that one or more of your hypotheses will be wrong. When you discover your error, rather than firing executives and/or creating a crisis, you simply change the hypotheses.

    What was lacking in the article was a clear definition of a Pivot.  A Pivot is not just changing the product. A pivot can change any of nine different things in your business model. A pivot may mean you changed your customer segment, your channel, revenue model/pricing, resources, activities, costs, partners, customer acquisition – lots of other things than just the product.

    Definition: “A pivot is a substantive change to one or more of the 9 business model canvas components.”

    Business Model
    Ok, but what is a business model?

    Think of a business model as a drawing that shows all the flows between the different parts of your company’s strategy. Unlike an organization chart, which is a diagram of how  job positions and  functions of a company are related, a business model diagrams how a company makes money – without having to go into the complex details of all its strategy, processes, units, rules, hierarchies, workflows, and systems.

    Alexander Osterwalder’s  Business Model canvas puts all the complicated strategies of your business in one simple diagram. Each of the 9 boxes in the canvas specifies details of your company’s strategy.  (The Business Model Canvas is one of the three components of the Lean Startup. See the HBR article here.)

    So to answer my students question, I pointed out that the author of the article had too narrow a definition of what a pivot meant. If you went back and analyzed how many Unicorns pivoted on any of the 9 business model components you’d likely find that the majority did so.

    Take a look at the Unicorn club and think about the changes in customer segments, revenue, pricing, channels, all those companies have made since they began: Facebook, LinkedIn – new customer segments, Meraki – new revenue models, new customer segments, Yelp – product pivot, etc. – then you’ll understand the power of the Pivot.

    Lessons Learned

    • A Pivot is not just when you change the product
    • A pivot is a substantive change to one or more of the 9 business model canvascomponents
    • Almost all startups pivot on some part of their business model after founding
    • Startups focused on just product Pivots will limited their strategic choices – it’s like bringing a knife to a gunfight

    About Steve Blank

    Entrepreneur-turned-educator Steve Blank is credited with launching the Lean Startup movement. He’s changed how startups are built; how entrepreneurship is taught; how science is commercialized, and how companies and the government innovate. Steve is the author of The Four Steps to the Epiphany, The Startup Owner’s Manual -- and his May 2013 Harvard Business Review cover story defined the Lean Startup movement.  He teaches at Stanford, Columbia, Berkeley and NYU; and created the National Science Foundation Innovation Corps -- now the standard for science commercialization in the U.S. His Hacking for Defense class at Stanford is revolutionizing how the U.S. defense and intelligence community can deploy innovation with speed and urgency, and its sister class, Hacking for Diplomacy, is doing the same for foreign affairs challenges managed by the U.S. State Department. Steve blogs at www.steveblank.com.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1258354 2018-03-08T17:00:00Z 2018-03-24T01:23:14Z Strategy is Not a To Do List

    I had breakfast with two of my ex-students from Singapore who were building a really interesting startup. They were deep into Customer Discovery and presented a ton of customer data on the validity of their initial hypothesis – target customers, pricing, stickiness, etc. I was unprepared for what they said next. “We’re going to do a big launch of our product in three weeks.” I almost dropped my coffee. “Wait a minute, what about the rest of Customer Development? Aren’t you going to validate your hypotheses by first getting some customers?”

    Without any sense of irony they said, “Oh, our investors convinced us to skip that part, because our customer feedback was all over the map and our schedule showed us launching in three weeks and they were worried that we’d run out of cash. They told us to stay on schedule.” Now I was confused, and I asked, “Well what do you guys believe – Customer Development or launch on a schedule?” Without missing a beat they said, “Oh, we believe both are right.”

    I realized I was listening to them treat Customer Development as an item on their To Do list.

    Suddenly, I had a massive case of déjà vu.

    Can You Pull This Off
    I was VP of marketing at Ardent, a supercomputer company where a year earlier I had a painful and permanent lesson about Customer Discovery. I was smart, aggressive, young and a very tactical marketer who really hadn’t a clue about what strategy actually meant.

    One day the CEO called me into his office and asked, “Steve I’ve been thinking about this as our strategy going forward. What do you think?” And he proceeded to lay out a fairly complex and innovative sales and marketing strategy for our next 18 months. “Yeah, that sounds great,” I said. He nodded and then offered up, “Well what do you think of this other strategy?” I listened intently as he spun an equally complex alternative strategy. “Can you pull both of these off?” he asked looking right at me. By the angelic look on his face I should have known that I was being set up. I replied naively, “Sure, I’ll get right on it.”

    Ambushed
    25 years later I still remember what happened next. All of sudden the air temperature in the room dropped by about 40 degrees. Out of nowhere the CEO started screaming at me, “You stupid x?!x. These strategies are mutually exclusive. Executing both of them would put us out of business. You don’t have a clue about what the purpose of marketing is because all you are doing is executing a series of tasks like they’re like a big To Do list. Without understanding why you’re doing them, you’re dangerous as the VP of Marketing, in fact you’re just a glorified head of marketing communications.”

    I left in daze angry and confused. There was no doubt my boss was a jerk, but unlike the other time I got my butt kicked, I didn’t immediately understand the point. I was a great marketer. I was getting feedback from customers, and I’d pass on every list of what customers wanted to engineering and tell them that’s the features our customers needed. I could implement any marketing plan sales handed to me regardless of how complex. In fact I was implementing three different ones. Oh…hmm… perhaps I was missing something.

    I was doing a lot of marketing “things” but why was I doing them? I had approached my activities as simply as a task-list to get through. With my tail between my legs I was left to ponder; what was the function of marketing in a startup?

    Strategy is Not a To Do List, It Drives a To Do List
    It took me awhile, but I began to realize that the strategic part of my job was two-fold. First, (in today’s jargon) we were still searching for a scalable and repeatable business model. My job was to test our hypotheses about who were potential customers, what problems they had and what their needs were. Second, when we found these customers, marketing’s job was to put together the tactical marketing programs (ads, pr, tradeshows, white papers, data sheets) to drive end user demand into our direct sales channel and to educate our channel about how to sell our product.

    Once I understood the strategy, the To Do list became clear. It allowed me to prioritize what I did, when I did it and instantly understand what would be mutually exclusive.

    Good Luck and Thanks For the Fish
    My students were going through the motions of Customer Development rather than understanding the purpose behind it. It was trendy, they had read my book and to them it was just another step on the list of things they had to do. They had no deep understanding of why they were doing it. So they were at a crossroads. Since their investors had asked them to launch now, what happened if their initial assumptions were wrong?

    As they left I hoped they would be really lucky.

    Lessons Learned

    • Entrepreneurs get lots of great advice.
    • Most of it is mutually exclusive.
    • Don’t do it if you can’t explain why you’re doing it.
    • Or else it all becomes a To Do list.

    About Steve Blank

    Entrepreneur-turned-educator Steve Blank is credited with launching the Lean Startup movement. He’s changed how startups are built; how entrepreneurship is taught; how science is commercialized, and how companies and the government innovate. Steve is the author of The Four Steps to the Epiphany, The Startup Owner’s Manual -- and his May 2013 Harvard Business Review cover story defined the Lean Startup movement.  He teaches at Stanford, Columbia, Berkeley and NYU; and created the National Science Foundation Innovation Corps -- now the standard for science commercialization in the U.S. His Hacking for Defense class at Stanford is revolutionizing how the U.S. defense and intelligence community can deploy innovation with speed and urgency, and its sister class, Hacking for Diplomacy, is doing the same for foreign affairs challenges managed by the U.S. State Department. Steve blogs at www.steveblank.com.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1254535 2018-03-01T15:00:02Z 2018-03-01T17:00:04Z Funding Basics: Customer Development

    Entrepreneurs take note. More startups fail from a lack of customers than from a failure of product development. That’s why I believe strongly that every new product company should have a methodology for developing customers.

    I’m a proponent of Steve Blank’s startup stack methodology for customer development, which features the following steps:

    • Customer Discovery – Begin with a business model canvas, a summary of how you’re going to serve customers and earn money

    • Customer Validation – Make assumptions, then test them to develop a repeatable and scalable sales process

    • Execution –  Fine tune your model to get to a market fit that is tight and profitable; pivot, as needed

    As an Alchemist Accelerator mentor, I recently had an opportunity to share some perspective about the customer development process and how to maximize success. The first thing I told the group in front of me—a large percentage of whom were engineers—was that they should focus everything on finding the right customer segment, rather than building or modifying a new product concept to fit initial discussions. I think I heard a collective sigh of relief before I began my presentation.

    Completing Your Canvas

    Research has proven effective customer discovery begins with a business model canvas, so the first part of our discussion, framed in that context was designed for them to hear one thing: You are making a best-guess at first. There will be plenty of time for refinement, when you know more.

    A strategic management and lean startup template, your canvas should reflect initial assumptions. To begin, you must understand the market you’re targeting—total addressable, served available, and/or target market. You’ll also need to define the type of market you’re hoping to penetrate. Is it existing with incumbents, but a known problem; new with no competition, but steep education requirements; re-segmented where you’re offering a lower cost or niche alternative; or are you cloning a concept from somewhere else?

    Your canvas should also identify key value propositions. What is the job your customers are hiring you to do? How will you do it, and most important, what one-to-three benefits will customers get from using your product or service?

    In the customer relationships section of your canvas, you’ll need to outline how you plan to

    • Get customers

    • Keep customers

    • Grow customers

    In addition, your canvas should highlight any other key activities, resources (e.g. required equipment), partners and costs (fixed and variable), as well as your anticipated revenue model (e.g., one-time scale, subscription, etc.).

    Finding Your Fit

    A completed business model canvas ensures your team has fully immersed itself in the customer problem. As such, it can serve as a foundation as you define tests for customer validation.

    Testing can begin once you’ve identified subjects. Who are they—end users, influencers, recommenders, decision makers, or others? What do they do all day, and can you create an organizational or influencer map around them? Plus, don’t forget to acknowledge any saboteurs because they have no interest in your success.   

    Next, only founders should conduct customer validation meetings, and they should be face-to-face for added visual cues. Don’t outsource the job. Ask open-ended questions and avoid trying to convince someone he or she needs your solution. Test your theories to determine if you’re on the right track. If you don’t get a good signal, reframe the problem. Test again.

    In general, ask questions that help you learn more. Lead with

    • Tell me more about…

    • What do you mean by…

    • How so…

    • Why is that…

    • What are your thoughts on…

    • How would you quantify…

    • How did you measure…

    • How did you come up with that…

    • What was your thinking behind…

    The goal of every customer validation meeting should be the same: To understand the problem space and the current solutions available.

    Pivoting and Execution

    During customer validation, your team may uncover some startling truths. Your product doesn’t fit the market it was intended to serve. Prospects already have a solution for x, but have you considered this other opportunity, y? Do not panic.

    Instead, apply your development methodology to your customer discovery process. Be agile. Don’t build a new product. Find a new set of customers. Pivot into a new space and test again.

    By following a customer development process, you have a tremendous opportunity to deliver what people will pay for, improving your product along the way. Moreover, you’ll have high-quality data to answer the question “who is your customer?” when potential investors ask.

    About Alan Chiu

    Alan Chiu is a Partner at XSeed Capital, with a strong background in enterprise software startups. His investment areas include mobile enterprise applications, data analytics platforms, enterprise infrastructure, and fintech startups. He serves on the Board of Directors of Breakaway and previously served on the board of StackStorm (acquired by Brocade – NASDAQ:BRCD). He has provided support to other portfolio companies including Lex Machina (acquired by LexisNexis of the RELX Group – NYSE:RELX), AtScale, Dispatcher, Teapot (acquired by Stripe), Pixlee, SIPX (acquired by ProQuest), Zooz, BrainofT, Mines.io, Inklo, and My90. Alan is currently Co-President for Stanford Angels & Entrepreneurs, an alumni association that seeks to strengthen Stanford’s startup community by fostering relationships among entrepreneurs and alumni investors.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the second in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1251039 2018-02-22T16:00:03Z 2018-02-22T17:00:03Z Funding Basics: Adopting the Best Business Model

    The culture of nearly every business-to-business software startup centers on products. Everyone talks about product innovation and disruptive technology, but I think today’s founders need more than great product ideas to launch successful companies.

    In my role as Managing Director of Hummer Winblad and also as an Alchemist Accelerator mentor, I share this advice with new entrepreneurs: Get as comfortable with your spreadsheets as you are with your product. By that I mean that your financial models show potential investors you’ll be a metrics-driven organization and that you understand you are building a business not just a product. I also believe that only metrics-driven companies can operate high-velocity business models.

    A New, Emerging Approach

    If success is 10 percent idea and 90 percent execution, deep thinking is required of teams pulling together new business models. For example, are you going to sell direct or through a channel?  Will you have a subscription or a perpetual model? Do you envision a “land and expand” model where you encourage a smaller, initial buy that increases over time? Does your business model reflect the way customers want to buy?

    Teams developing enterprise software traditionally have had to factor in a 9-to-12-month sales cycle on top of the year or more it takes to deliver product. Both development and expensive sales professionals operating in this model require significant runway—and thus funding.

    Fortunately, times are changing.

    Taking a cue from evolving consumer models, I now encourage enterprise software founders to more precisely consider cost of sales (including customer acquisition costs relative to pricing and hiring) together with product decisions.

    Our team members and other venture firms ask them to think about how they can achieve operational and growth targets from two perspectives:

    • The old model – Costly, large account-focused, in-person sales teams operating on a quarterly rhythm

    • The new model – High-velocity, mid-market-focused, inside sales teams operating on a weekly rhythm

    The new, high-velocity model optimizes sales and marketing processes by measuring the end-to-end effectiveness of all touchpoints. With metrics, teams can determine what is and what isn’t delivering results. I created two blog posts a few years ago explaining the high-velocity business model and the metrics for a high-velocity business model—based on the success of teams that Hummer Winblad invested in early.

    High-Velocity Benefits

    For a startup pricing products in the USD$150,000 and up range, leveraging the traditional, enterprise sales model may still be practical and even preferred. For everyone else, here’s why a high-velocity model makes more sense:

    • Faster time to revenue – The combination of an assertive inside sales professional (who can reach 80 to 100 prospects a day) and a web purchasing model speeds sales, which enables the company to run on monthly recurring revenue.

    • Greater accountability – When your product team’s responsibilities expand beyond building the solution to the entire lifecycle (from first customer touch to download to using), teams are more collaborative and can achieve greater success faster.

    • Complete visibility – Companies operating high-velocity models are highly automated and instrumented, so individuals and teams are always aware of their goals and progress toward reaching them—from calls and demos to trials, seats, and monthly volumes.

    Does Your Business Have the DNA?

    In a high-velocity business model, leadership, product, sales and marketing teams all shoulder responsibility for success. We see entrepreneurs embracing this new approach taking a similar journey, learning from others that have succeeded already about how to ramp up fast.

    My tips for them include the following:

    1. Hire consumer experts to run your enterprise marketing model, so it’s firing on all cylinders

    2. Simplify the sales process by adding a free or low-cost download feature

    3. Add insides sales professionals to follow up on every lead and upsell from the download

    4. Run everyone in the company through your sales process—from start to finish—to ensure everyone understands it

    5. Test online pricing and trial models by dividing traffic

    6. Test your social media and web flows, counting the number of clicks at each step

    7. If you choose to work with channels, hire someone that has previously built them

    8. Bet on mid-market customers to start, but establish a sales value that when exceeded, makes sense to add enterprise sales

    For founding teams seeking funding, business models matter. Remember your ability to explain the thinking behind your business model is as important as explaining the product you’re going to bring to market—and sometimes, more important.

    About Me

    As Managing Director at Hummer Winblad, I oversee investments in SaaS, virtualization, cloud and mobile technologies. Prior to joining Hummer Winblad Venture Partners in 2006, I was involved in founding and operational roles at start-up companies. I was a co-founder of AutoFarm (now Novariant), a company focused on GPS and robotics. Although I spend less time programming now, I started my technical career coding and hacking computer games. I have a Master of Science (Engineering) degree from Stanford University, an M.B.A. from the Stanford Graduate School of Business, and an Engineering Physics degree from Queen’s University.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the first in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1230702 2018-02-01T16:11:14Z 2018-02-01T17:00:05Z Not BI, AI

    A product business can double its revenue and quadruple its margins by moving to a service business. What is service? It's information, personal and relevant to you.  

    Amazon delivers information that is personal and relevant to you, for example, with its recommendations: customers like you bought this book, or customers like you like this music. Now think about your favorite banking site and log in. I will contend that there’s very little personal and relevant information. The only reason you’re being asked to log in is for security reasons. After that you are really looking at a big shopping cart to move money from savings to checking, buy stocks, sell a bond, etc. 

    Could the bank deliver information that’s personal or relevant to you? Could they say that people like you bought this stock, or people like you re-financed their mortgage? Yes, they could, so why don’t they? Well, you probably never thought about this, but the consumer Internet that Google and Bing let you see through search is believed to only be about 100 or 200 terabytes. That’s it. Now, I’ll guarantee your current IT systems have 10, 100, or 1,000 times that amount of information; so why can’t they deliver information that is personal and relevant to you? Well, I say they are held hostage by the SQL monster. So let’s just have a little fun here.

    It’s the late ‘90s and I have several SQL engineers in the room. I come in with a brilliant business idea. My idea is that we are going to index the consumer Internet and we’re going to monetize it with ads. We’re going to be billionaires! Just guess what the SQL engineers would do?

    The first thing they’re going to do is design a master, global-data schema to index all information on the planet. The second thing they’re going to do is write ETL and data cleansing tools to import all that information into this master, global-data schema. And the last thing they are going to do is write reports, for instance, the best place to camp in France or great places to eat in San Francisco.

    Any of you who are technical are probably laughing right now thinking, “Well that’s a completely stupid thing to do.” But if you try and attack the problem using SQL and BI tools, you’re also going to fail.  

    Furthermore, as you connect your machines, you have the opportunity to bring in large amounts of time-series data. Modern wind turbines have 500 sensors and the ability to transmit those sensor readings once a second. Most analytic techniques depend on the idea that the data scientist can try and visualize the data, but how is that possible if I have a 1,000 wind turbines and data for 12, 24 or 36 months?  How can we learn from that?

    Artificial Intelligence (AI) has been increasingly in the news. Google’s DeepMind made headlines when the machine, AlphaGo, programmed to play Go, defeated Lee Sedol, one of the best players in the world, by 4 - 1. Amazon’s Echo and voice assistant Alexa is being widely praised for its voice recognition capabilities, and many people remember how Watson handily beat the best Jeopardy players in the world.

    Things have been changing quickly and here is a great example. ImageNet is a database of millions of images. Beginning in 2010 the ImageNet Challenge was established to see how well a machine would do at object recognition. As a point of reference an average person will be able to achieve 95% accuracy. In 2010, the winning machine could correctly label an image 72% of the time. By 2012, accuracy had improved to 85%, and in 2015 the machine achieved 96% accuracy.

    So why have things been changing so quickly?

    First, we’re continuing to get more computing and more storage for lower and lower prices. Next generation compute and storage cloud services can provide thousands of computers for an hour or a day. AI and machine learning software require lots of computing during the learning phase. The second reason is the emergence of neural network algorithms. Third, it’s not possible to apply these advanced AI technologies without data, and lots of it. Consumer Internet companies like Facebook are able to use billions of photos to train facial recognition systems. AlphaGo learned from millions of games of Go and Alexa learned from millions of voice patterns.

    While we’ll continue to see progress in replicating what humans do, we have the opportunity to apply these AI technologies to even more important challenges. Today, many of the machines that generate electricity, transport goods, farm food, or sequence genes have large amounts of data. If we were able to connect these machines and collect the sensor data from them, we would have the opportunity to use AI and machine learning technologies to operate a more precise planet. Imagine a future farm that can use fewer pesticides, which not only reduces the cost of the food, but also makes it healthier. A future power utility could be based on a vast array of solar panels, wind turbines, small hydro generators and batteries to generate more power, much more efficiently. A pediatric hospital could share the results of millions of MRI scans and diagnose patients far faster.

    Next-generation machine companies could not only double their revenues and quadruple their margins, but build a better planet in the process.

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups including as the Executive Chairman of Lecida, which is building precision assistants for the IoT using AI technologies. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1234283 2018-01-25T16:03:55Z 2018-02-01T08:23:50Z Service is Not Break-Fix

    As a student of business, you may have come to realize that with a recurring-service-revenue business, you can not only double the revenues of the company, but also quadruple the margins. I recently spoke with an executive of a large European company who has a 50/50 business; 50% of their revenue is selling machines and 50% is service on those machines. He said, “In 2008 our revenues went down, but our margins went up.”

    But what is service? Is it answering the phone nicely from Bangalore? Is it flipping burgers at McDonald’s? No. Service is the delivery of information that is personal and relevant to you. That could be the hotel concierge giving you directions to the best Szechuan Chinese restaurant in town, or your doctor telling you that, based on your genome and lifestyle, you should be on a specific medication. Service is personal and relevant information.

    I’ve heard many executives of companies that make machines say, “Our customers won’t pay for service.” Well of course, if you think that service is just fixing broken things, then your customers will think you should be building a more reliable product.

    Service is information. In 2004, the Oracle Support organization studied 100 million support requests and found that over 99.9% of them had been answered with already known information.

    Aggregating information for thousands of different uses of the software, even in a disconnected state, represents huge value over the knowledge of a single person in a single location. Real service is not break-fix, but rather information about how to maintain or optimize the availability, performance or security of the product.

    Above is my Amazon home page. Every time you log in, Amazon attempts to deliver information that is personal and relevant to you. For instance, people like you bought this book. If you look closely at the image, you might guess who uses my Amazon account. Now, let’s point something else out, namely the little shopping cart in the upper right hand corner. That’s the transactions processing system. It has to operate securely with scalability, but how important is it?  Not very.  Instead, most of the real estate of the page, and therefore of the company, is dedicated to delivering information that is personal and relevant.  

    Service is information.

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups in roles from investor to executive chairman. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1230695 2018-01-18T17:00:00Z 2018-02-01T08:23:50Z Not Machines, It’s the Service

    If your company builds agricultural, power, construction, healthcare, oil, gas or mining machines you’ve probably heard about the Internet of Things.  All of us in the tech community are excited to tell you about our cool technology to run on your machine, connect it to the Internet, collect data from it, and then make predictions from that data using advanced machine learning technology.

    But maybe the question you’re asking as the CEO of one of these companies is why should I care?  Isn’t this just stuff my geeky R&D staff cares about? How can it be meaningful to my business?  

    I’ll be making the case that with IoT software; you can not only double the size of your business but also create a barrier that your competition will find difficult to cross.

    Next generation machines are increasingly powered by software.  Porsche’s latest Panamera has 100 million lines of code (a measure of the amount of software) up from only 2 million lines in the previous generation.  Tesla owners have come to expect new features delivered through software updates to their vehicles.  Healthcare machines are also becoming more software defined. A drug-infusion pump may have more than 200,000 lines of code and an MRI scanner more than 7,000,000 lines. On a construction site a modern boom lift has 40 sensors and 3,000,000 lines of code and on the farm a combine-harvester has over 5,000,000 lines of code.  Of course we can debate if this is a good measure of software, but I think you get the point.  Software is beginning to define machines.

    So if machines are becoming more software defined, then maybe the business models that applied to the world of software will also apply to the world of machines. Early in the software product industry we created products and sold them on a CD; if you wanted the next product, you’d have to buy the next CD. As software products became more complex, companies like Oracle moved to a business model where you bought the product (e.g. ERP or database) together with a service contract. That service contract was priced at a derivative of the product purchase price. Over time, this became the largest and most profitable component of many enterprise software product companies.  In the year before Oracle bought Sun (whilst they were still a pure software business) they had revenues of approximately $15B, only $3B of which was product revenue, the other $12B, over 80%, was high margin, recurring service revenue.

    In the world of machines, you might wonder why General Electric is running ads on Saturday Night Live talking about the Industrial Internet.  Why are they doing this?  All you need to do is download the 2016 10-K (http://www.ge.com/ar2016/assets/pdf/GE_2016_Form_10K.pdf) and look on page 36.  Out of $113B in revenue they recognized $52B, or nearly 50%, as service revenue.  Imagine if GE could move to 80% service revenue, not only would the company be tens of billions of dollars larger, but also margins for the overall business could easily double. And let me remind you this is all done without connecting the product (software or machine).  Once connecte you can provide even more service and ultimately deliver your product as a service.  As we have already seen in high tech software and hardware moving to product-as-a-service is transformative.

    So if you’re an executive at a power, transportation, construction, agriculture, oil & gas, life science, or healthcare machine company, how big is your service business?

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups in roles from investor to executive chairman. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.


    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1181877 2017-08-08T20:15:02Z 2018-02-01T08:23:50Z CANDID CONVOS: Angel Fundraising with Ahryun Moon, CEO at Goodtime.io

    Introduction


     Ahryun Moon is CEO and Co-founder at GoodTime.io, a recruiting enablement platform that automates interview scheduling for companies like Airbnb, Stripe, Yelp, Thumbtack and more. She is a financial professional turned engineer! She taught herself how to code while building her first enterprise software at Freescale Semiconductor, Inc., at which time she was a financial analyst. The software got adopted company wide.

    Some interesting things about her:

    1. She caught a thief using Twitter (check out http://bit.ly/2gmr5P4) - gone viral on Hacker News, Reddit, Facebook, Twitter and Youtube

    2. Her team at GoodTime.io won 3 hackathons - Salesforce $1M, Toyota and Launch hackathons

    3. Her team built Etch Keyboard which was featured on the App Store for 3 weeks.

    4. She still has a CPA license in good standing


    The Convo


    Interviewer (ZP): What was the size of your first check?

    Ahryun Moon (AM): $100 was the first check. What happened was right before Alchemist, I was down and depressed and going to a bunch of people asking for advice and feedback and money. I then went to Edith and she, after hearing me out, said, “Hey I'll be your first investor, here's your hundred dollar check. You can put me on Angel list.” With investors the very first check is important so you can put someone's name on your angellist. That’s hard to get. The very first person that wants to be on your investor roster is always challenging. She said to just use her name she’d give us the one hundred dollars. I have kept our hundred dollars even today. So that $100 is still on my cap table, as I really love the fact that she believed in me when no one did. So my first check was $100, and then the second check was 10k.

    ZP: What about the first check over 25k or more?

    AM: Oh 25k or more. The first time that a check was larger than 25K was 50k.

    ZP: And when was the closing date you received it.

    AM: We closed the check on the day of the demo day.

    ZP: And it was just that simple?.

    AM: He came up to me and said he was just ready to write the check.

    ZP: What industry is your company in.

    AM: HR and Recruiting.

    ZP: Tell me about the process of closing that check and from start to finish. How you were introduced all the way through to actually having a check in hand or money in the bank.

    AM: For the 50k check, he was in the audience at the demo day. He loved it. He came up to us and he was literally ready to write the check. I think we got the check within a few days or a week or so. He didn't have any other references. He just saw us at demo day and liked us. Sometimes you can really run into someone that just believes in you and gives you unconditional love for the product that you're making. So I am lucky with that. But I think you just get lucky sometimes.

    ZP: So what was it like doing that to the first 10k check.

    AM: The 10k check was when we were going negative, negative, negative, and we were about to break our 401k. It was one of the Alchemist Mentors and he liked our product from the beginning. We were so afraid of asking for money at the time.

    ZP: How did you meet him?

    AM: He was one of the mentors that we paired up with at one of the events, the CEO mentor event. We did speed dating, he was one of the three people there we met. He liked the idea and we never asked for money. We didn't know to ask for money at the time. We invited him over to our office and we talked for another hour or so after the event. That was after a month or two after we met for the first time. And then we mentioned, “Hey we are looking for investors”. And he simply said “How much”. We told him we were looking for 10k. And he's said, “OK. I don't have a check with me. I'll wire you the money as soon as I get back to my office.” He wired it within a few days.

    ZP: Wow. Was there any back and forth between you or was it pretty straightforward?

    AM: It was really straightforward. People who argue with you and nitpick on this or that and say “I want to see more proof”, they never work out. Investors that ended up giving us money, you can tell from the first meeting that they believe in you and will give you support. So I'll say my advice is this: it's the ones that give you bullshit excuses and say you’re too early, you're too late in the stage, you're pre-revenue you or your team is too small, move on to the next person. They will not give you money. They never gave me any money. People who said those things never gave me money.

    ZP: Those things were just an afterthought when they just believe you.

    AM: Yes. I think I took them extremely personally in the beginning and that made me really, really depressed. Whenever I get that kind of excuse next time I wouldn't too depressed. I will just say, “Ok fine. Next person.”

    ZP: Is there anything else you'd like to share? Maybe something that stuck out with a new kind of angel fundraising process in general or specifically with all the checks that you're trying to close.

    AM: Yeah. Everyone told me not to cold email. Everyone told me not to cold call investors. But I did. I closed our last 100k check with a cold call. So I wouldn't say cold calling is the worst thing you can do. Once you run out of referrals you have to cold call and sometimes you really meet the right person while doing that. So I would not advise against cold calling.

    ZP: That's good advice. cold call. OK. Well that's really good thank you.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1160901 2017-06-05T18:23:06Z 2018-02-01T08:23:50Z 2017 Seed Accelerator Rankings!

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1155014 2017-05-23T19:00:02Z 2018-02-01T08:23:50Z PRESS RELEASE: ALCHEMIST ACCELERATOR ADDS JUNIPER NETWORKS AS BACKER

    Contact: Danielle D’Agostaro                                                                                                   RELEASE: May 23, 2017

    Email: danielle@alchemistaccelerator.com


                                         ALCHEMIST ACCELERATOR ADDS JUNIPER NETWORKS AS BACKER

                                 Juniper Networks Joins Alchemist Accelerator’s Second Round Fund as Backer


    San Francisco, May 23, 2017 – Alchemist Accelerator, an accelerator dedicated to enterprise start-ups, today announced that Juniper Networks has joined Analog Devices, Cisco, Ericsson, GE, and Johnson Controls as a backer in the accelerator’s second fund. This brings the total fund to $6.5 million.

    Alchemist Accelerator is a six-month program, accepting about 20 companies every four months. On average, accepted companies receive $36,000 in seed funding. Alchemist structures the program around mentorship, sales and fundraising to help early-stage companies raise their seed or series A round and secure their first few customers.

    Many founders who have gone through the program would agree that a major perk of joining Alchemist comes from the large network of high-caliber experts and coaches who mentor Alchemist founders.

    “We are thrilled to have Juniper Networks join as a backer of Alchemist. Few companies think as deeply about next gen trends in AI, cloud, analytics, and networking – all core areas to Alchemist – as Juniper does. We are excited to have Juniper join the Alchemist family,” said Ravi Belani, Founder and Managing Director of Alchemist.

    Since the debut of Alchemist’s first class in January 2013, 14 Alchemist companies have been acquired (including Cisco’s acquisition of Assemblage and Dropbox’s acquisition of Mobilespan). More than 50 percent of its graduates have gone on to raise significant seed or institutional funding rounds. The average raise of these companies is $2.6 million. Many of these are from the top venture capital firms in the valley, including Andreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Foundation Capital, Founders Fund, Greylock Ventures, Menlo Ventures, Redpoint Ventures, Social + Capital Partnership and True Ventures. The complete list is provided here.

    “At Juniper Networks, we believe that venture investment is an integral part of our innovation engine. Alchemist fills a gap in our portfolio strategy, acting as a vehicle to invest in seed-stage companies, a stage we are eager to participate in,” said Rita Waite, Investment Manager at Juniper Networks. “We are thrilled to be joining Alchemist Accelerator as a backer and look forward to working with Alchemist start-ups and its network.”

    Today, Alchemist held its 15th Demo Day at Juniper Networks in Sunnyvale in conjunction with the announcement. They were joined by more than 200 customers, partners and investors. The event debuted 18 companies.

    ###

     

    Learn More

    Anyone interested in getting involved as a mentor, investor or customer or members of the press, should fill out this form: https://vault.alchemistaccelerator.com/register-profile.

    For more information on the accelerator, please visit http://www.alchemistaccelerator.com/.

    About Alchemist Accelerator
    The Alchemist Accelerator is a new venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. The accelerator seeds around 60 enterprise-monetizing ventures / year. Over 50% close institutional rounds within 12 months of their Alchemist Demo Day[LM1] . 


     [LM1]I removed our boiler plate and media contacts. This is a third party release distributed by Alchemist without our ticker or a classified joint release.


    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1136436 2017-03-06T20:45:44Z 2018-02-01T08:23:50Z PRESS RELEASE: ALCHEMIST ACCELERATOR ANNOUNCES FOCUS ON INVESTMENTS IN COLLABORATION

    Contact: Danielle D’Agostaro                                                                                     RELEASE: DATE March 3, 2017

    Email: danielle@alchemistaccelerator.com

     

                                ALCHEMIST ACCELERATOR ANNOUNCES FOCUS ON INVESTMENTS IN COLLABORATION

                                                 Cisco Investments will continue as an investor in Alchemist’s new fund


    San Francisco, Calif., March 3, 2017– Today, Alchemist Accelerator announced that it will be focusing a part of its new fund on early-stage collaboration startups. This includes startups that integrate with the Cisco Spark Service or use Cisco Collaboration APIs to enable voice, video and messaging.

    Earlier this year, Alchemist Accelerator announced their new fund. Today, Cisco Investments, an existing Alchemist investor, joins the investors in Alchemist’s new fund. Cisco Investments had invested in Alchemist’s prior fund, which focused on accelerating the development of a number of seed-stage ventures. As part of that fund, Alchemist ran an Internet of Things focused accelerator that helped encourage IoT entrepreneurs and startups through funding, mentorship and resources.

    With today’s announcement, Alchemist will expand its focus and support to early-stage innovation within collaboration. Cisco Investments and Alchemist will work together to identify, invest in and develop early-stage startups that focus on enabling collaboration in the enterprise. Alchemist will also dedicate a portion of their fund to invest in early-stage startups that are part of the Cisco Spark ecosystem. Cisco is making this investment via the Cisco Spark Innovation Fund it announced last March.  Cisco Spark is the industry’s first integrated and cloud-based collaboration service. It provides users the ability to call, message, and meet, and access those services with apps, cloud-connected hardware, and a rich set of cloud APIs. These APIs, at developer.ciscospark.com, are the integration point for investments from Alchemist’s fund.

    “Our relationship with Alchemist has given us exposure to a wide variety of enterprise startups,” said Rob Salvagno, head of Cisco Investments and vice president of Cisco Corporate Development. “With this new fund, our goal will be to support a new generation of startups that are disrupting the collaboration industry by developing new features and functionality on top of Cisco Spark.”

    Alchemist already has made investments in a number of collaboration startups, including Assemblage and Synata, two companies that were acquired by Cisco.

    The Alchemist Accelerator is a six-month program, accepting about 20 companies every four months. On average, the companies that are accepted receive $36,000 in seed funding. Alchemist structures the program around mentorship, sales, and fundraising to help early-stage companies raise their Seed or Series A round and get their first few customers.

     

    ###

    Learn More

    Anyone interested in getting involved as a mentor, investor or customer or members of the press, should fill out this form: https://vault.alchemistaccelerator.com/register-profile.

    For more information on the accelerator, please visit http://www.alchemistaccelerator.com/.

    About Alchemist Accelerator 

    The Alchemist Accelerator is a new venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. The accelerator seeds around 60 enterprise-monetizing ventures / year. Over 50% close institutional rounds within 12 months of their Alchemist Demo Day. 

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1104203 2016-10-31T17:52:43Z 2018-02-01T08:23:50Z Generation IoT: The Key to Business Survival in the 21st Century


    “The only constant is change.” It’s an adage that goes back 2500 years to the Greek philosopher Heraclitus. But never has it been as true as it is today. Technology adoption is growing exponentially, driving change at a dizzying pace. Billions of devices are connecting to networks — most of them the sensors, controllers, and machines that power the Internet of Things (IoT). You probably see the rapid growth of connected devices in your own organization: on the manufacturing floor, in your logistics system, hospital or retail store. But are you seeing the corresponding business impact generated by connected processes and business models enabled by IoT?

    Over the last 25 years, organizations have had to reinvent themselves every three to seven years to keep up with the pace of change. Companies that missed one technology transition might scramble to catch up, but missing two meant a slow fade to obscurity, irrelevance, and death. Just think about the rapid evolution from records, to cassettes, to CDs — with each transition creating new winners and losers. Today, the evolution has come full circle as digital streaming services have made any kind of physical media obsolete.

    That kind of relentless change threatens the survival of many businesses. According to The Boston Consulting Group, only 19 percent of S&P 500 companies from 50 years ago are still in existence today. How can you ensure the survival of your business?

    A new generation of leaders, makers, thinkers, and doers is meeting that change with flexibility and optimism, and transforming it into opportunity. In my upcoming book, Building the Internet of Things, I call these pioneers “Generation IoT.” These are the people who see the transformational power of IoT-driven processes, business models and new revenue streams. They are eager to champion and drive these opportunities in their organizations. These people know that IoT is not just one project, one training session, one change. They know that in order to succeed they and their organizations need to adjust and re-learn, over and over again.

    Generation IoT is first defined by openness — open standards, open collaboration, open communications, and open, flexible business models. Members of Generation IoT can be found in IT or operational technology (OT). They can run the plant, or be part of the supply chain. They can be vendors, contractors, or CXOs. They can be young or old. All are willing to learn and take risks, and are good at building virtual teams internally and partnering externally. You can recognize these new winners not by their age or their titles — but by their ability to build and deploy agile, flexible business solutions.

    Here’s an example: a decade ago, visionaries talked about mass customization — building mass-produced products to each individual buyer’s specifications. But it was difficult to implement efficiently and proved to be an idea ahead of its time. Today, IoT makes this concept much more practical and cost-effective because information can be shared in real time between every element in the supply chain. Buyers can click on the components they want. Suppliers and logistics providers can see what is being ordered and adjust their scheduling accordingly. Production systems can be retooled as needed. With the information flowing up and down the supply chain, all the necessary materials are at the production line when that customer’s order is being assembled, whether it’s a car or a three-piece suit.

    With IoT, mass customization is not just a future possibility — it’s starting to happen. Daihatsu Motor Company is already using 3D printers to offer car buyers 10 colors and 15 base patterns to create their own “effect skins” for car exteriors. Each car rolls off the line customized for that individual buyer.

    The key question — and it’s the focus of both my book and this blog series — is how it’s all supposed to happen.

    Yes, vision is important. Pointing your organization toward where and how it needs to transform itself is key. But the road to realizing such vision is a multi-year, multi-phased journey and it starts with you successfully tackling one of today’s business problems. A low-risk, small project based on a well-established use-case is all that is needed to get going. Armed with the initial success, you can then pick a more complex problem and an IoT solution that will also have a bigger impact. IoT is a journey.

    Along the way, you will break down silos and build understanding and cooperation among IT, OT, supply chain and finance. You will also bring in an ecosystem of partners for a complete, converged solution. The good news is that thousands of your peers have already started on the IoT journey. Based on their experiences, a set of best practices has emerged:

    • Have a big vision, but start with a small project using one of the four fast payback scenarios I outline in my book: connected operations, remote operations, predictive analytics, and predictive maintenance.

    • Build you own business case by comparing industry benchmarks with your own total cost of ownership data.

    • Get a C-suite sponsor, because you are not implementing one IoT project, you are starting on the journey that will transform your organization, your industry, and your career.

    • Build a cross-functional team; you need complementary skills, so maximize the chances of success by building support and buy-in across your entire organization.

    Finally, recognize that we’re all relatively new at this. None of us have spent our careers on IoT — not yet. You can be an extremely valuable member of this transformation with the skills you have today. Whether you’re in Generation X, Y, or Z, you can be part of Generation IoT. Stay tuned for my next blog, where I’ll take a closer look at the four fast-payback paths to IoT.

    - Maciej Kranz, VP, Corporate Strategic Innovation, Cisco Systems

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1091926 2016-09-20T17:39:11Z 2018-02-01T08:23:49Z How to get Momentum when Fundraising


    The most powerful tool you have in closing an investor is fear of missing out (FOMO). FOMO only occurs when you have momentum in the round. Once you get that momentum, you start closing investors and a virtuous circle begins, increasing FOMO and carrying you to a great round. Here’s three ways to build momentum when you’re fundraising for your startup.

    Low Round Targets

    Setting a low round target does 2 things: first it broadens the number of investors who can participate in the round, increasing competition. Second, the round looks almost closed with even a small amount of investment. You can always increase the size of the round later as demand catches up. The only cost of this approach is creating a credible business plan for each successive target.

    For example, you only need one investor with $50k to be half full in a $100k round. Conversely, if you tell an investor you’re raising $3M and have $50k raised, the situation seems less attractive. When you start getting yeses you can increase the size of the round in stages and still have the majority raised at all times.

    Reserving Space

    You can also build momentum by getting smaller investors to earmark parts of the round. This usually comes in the form of new, angel investors and existing investors participating with their pro rata (or more). Ask the investor if they’d like to reserve a spot while they decide? If you get a verbal yes, you can’t give that space to another investor and thus more of the round is now ‘earmarked’, ‘spoken for’ or ‘wrapped up’.

    For example, say you’re raising $500k and currently have $150k committed. When talking to a new and interested investor, Investor-A, you ask their usual check size, which is $100k. Next, ask if they want you to hold that space for them while they decide, as the round is filling up. If Investor-A says ‘Yes’, then going forward you can’t offer that space to any other investors. Thus, your round is now half full.

    Maybes are worse than Noes

    One of the hardest parts of fundraising is hearing noes. Your fear of these noes can hinder momentum. All great companies get a lot of rejections during fundraising and being willing to push for a decision will actually help your process. Leaving a potential investor for weeks in the maybe column will almost certainly result in a no. Follow up regularly with updates but don’t blast everyone with fake success to push for an immediate decision.

    To avoid hassling a deciding investor without cause, your follow ups should be focused on good news. Provide updates on new investors, or reservations, in the round, customer wins and product launches. At the end of each email you can ask if they’ve decided or need anything else. Eventually, you have to give a deadline to avoid dragging out the conversation too long. Even if that leads to a ‘no’, it’s still progress.

    Hi Joe,
    Wanted to quickly share some great news, the team closed Hooli today and the contract should be signed next week. Let me know if you have any questions or if you’ve come to a decision?
    Thanks
    Ash

    Raising money for your startup is a grueling test for any founder but it gets better once you have momentum. Making use of these strategies makes it easier to get started and increases your chances of getting the round you need.

    Thanks to Duncan Davidson, Pejman Nozad, Mar Hershenson and Kaego Rust for reading drafts of this.

    Cofounder & CEO @SendHub (Cameo Global), Faculty @AlchemistAcc. Alum@YCombinator@UniofOxford. Prev: @Klout (Lithium), @OneRiot (Walmart). IG: ashrust

    Re-tweet post - 

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    tag:blog.alchemistaccelerator.com,2013:Post/1072322 2016-07-12T10:00:00Z 2018-02-01T08:23:49Z 10 Due Diligence Points When Selecting a Startup Accelerator

    Last week Samir Kanji (First Republic Bank) published a blog with a list of the accelerators ranked by graduates who received more than $750,000 in funding.  Cromwell Shubarth of the San Jose Business Journal pointed out a change in the rankings for the Alchemist Accelerator.

    Game Changers Silicon Valley had a chance to catch up with Ravi Belani and Danielle D’Agostaro from the Alchemist Accelerator a few weeks ago.  This interview, conducted for the Game Changers Silicon Valley show, as part 1 of a two part show.  Here is a 2 ½ minute segment from the interview with the Alchemist Accelerator.

    Accelerators provide an Education in Entrepreneurship

    Accelerators are very similar to educational institutions, and it is important to separate “the signal from the noise” to allow company to identify the best fit among the many accelerators.

    The Alchemist Accelerator admits only companies that monetize from the enterprise and who have established technical teams.

    A focus on the enterprise allows companies to identify customers and generate revenues from the enterprise which improves the viability of the startup.

    The classic enterprise entrepreneur is the person with 10 years of experience, although there are very disruptive companies who have never worked in the enterprise space.

    Valuable learning can be gained from the mentorship via coaches and experts, every companies has a CEO coach, a Sales Coach and Goal coach plus domain knowledge experts.

    There are five venture capital investors and five corporate investors who provided the working capital of the Alchemist Accelerator.

    Both segments of the Alchemist Accelerator can be viewed at the link for Game Changers North America

    Take-away considerations for entrepreneurs:

    Not all accelerators are created equal:

    Founding teams should review and qualify accelerator program in your geographic area.  Most of this information can be taken from blogs and articles.  Some of the areas for a general assessment should be:

    1. List the terms of the accelerator program including program duration, working capital provided, common stock contribution to the accelerator, physical work space, frequency of meetings, and training sessions such as pitch training and business plan reviews.
    2. What is the reputation and value proposition of the accelerator?  Most accelerators have a mission statement, a primary value proposition and an operating plan ( number of classes per year, number of companies per class, and a list of participating investors at their demo day)
    3. Does the accelerator have domain expertise via mentors or coaches in the markets or the technology areas being addressed by the startup?
    4. Does the accelerator do an in-depth review and qualify companies applying to join the program?
    5. What is the level of investor interest, traction and engagement with companies during the program, ideally there should be engagement well before the demo day.


    Once a startup company narrows the list of accelerator programs that would be a fit, the founders should conduct their own due diligence on the accelerator.  The following our list of starting points:

    1. Contact companies who completed the program, including both companies who received follow on funding and those who did not receive the follow up funding. Speaking with co-founders of companies who did not receive follow on fundingwill provide insights into the perceived reasons funding was not obtained as well as help verify the quality of the program.
    2. Review the alignment of the accelerator’s domain and mentor expertise to your company and the founder.
    3. Review and evaluate if the listed investors who invested in previous graduating companies are the appropriate type of investors for your company.
    4. Review the connection and relationship maintained by the accelerator with post graduate companies, can a company who has completed the program continue to draw upon the resources and advisors connected to the accelerator.  
    5. Review published videos from the demo-day presentations.  These publicly available sources provide insight into the type, status ( pre-revue, revenue) and quality of the companies in the various startup accelerators. Some accelerators have a webpage listing their demo day presentations, or do a quick search on YouTube for “accelerator_name demo day”.

    Summary

    The first decision is to determine if an accelerator will materially promote a startup company's progress both in development and execution of the business plan and engagement with potential investors. 

    Choosing the wrong accelerator can result in a disappointing experience.  All accelerators will quote metrics on the average follow-on funding received as a result of the program.  However, the average funding percentages for companies in past programs represents only one data point. Conducting additional due diligence can significantly improve your chances for the right decision as well as a successful engagement and outcome.

    For more Game Changers Silicon Valley shows: http://www.GameChangers.tv

    Facebook: Game Changers Silicon Valley

    Twitter:  GameChangersX


    Jim ConnorExecutive Producer at Game Changers Silicon Valley; Angel Investor

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1070869 2016-07-08T02:26:59Z 2018-02-01T08:23:49Z Two Questions, One Answer

    In 2004 I published my first book, The End of Software. At the time I was the President of Oracle On Demand, so many people found it a curious title. In the book I discussed the fundamental economic reasons software should be delivered as a service. As an example of new startups in the field I highlighted four companies: VMWare, salesforce.com, Netsuite and OpenHarbor, which were all pre-IPO companies at the time. While I didn’t get all four correct, three of the four have gone on to be major companies driving the second generation of enterprise software.

    When I left Oracle, I started to wonder what was next for enterprise software. We’ve built CRM, ERP, HR, supply chain and purchasing software for on premises deployment and now all are being delivered as a cloud service. While delivery as a cloud service provides both lower cost and higher quality, the functionality has remained largely the same.

    So, are we at the end of innovation for enterprise software?

    In 2010 I started a cloud computing class at Tsinghua University in Beijing. The Amazon team was kind enough to give me $3000 worth of AWS time for the students to use. I showed up in class and told them it would buy a small server in Northern California, Virginia or Ireland for 3 ½ years. They looked bored; after all, they could also get a server in China for 3 ½ years. Or, I said, $3000 will buy you 10,000 servers for 30 minutes.

    So, what could you do with 10,000 servers for 30 minutes?

    Like you, I’ve heard the buzzword IoT for quite a few years. I mostly ignored it because I wasn’t sure why my toaster should talk to my coffee maker. But a few years ago I invited Bill Ruh, CEO of GE Digital, to deliver a guest lecture at my Stanford class and his talk raised my curiosity; so a year ago I decided I needed to learn what was going on in industrial IoT, or some would call enterprise IoT. With the help of a crowd of at least a hundred experts, I documented nearly twenty different case studies spanning all of the major industries: power, water, oil & gas, agriculture, healthcare, construction and transportation.

    Mid way through building all of these cases the answer to my two questions became obvious. While second generation enterprise software has helped reduce the cost and improve the efficiency of some enterprises it has done little to transform our physical world. With the decreasing costs of sensors, compute and storage we now have the ability to create a more precise planet. And unless we all move to Mars, we’re going to need to produce energy, water, healthcare and food more efficiently, more precisely. And if you consider that all developing  economies require fundamental infrastructure, shouldn't we engineer next generation healthcare, power, and agriculture using powerful new IoT software? In the developing economies we skipped land line telephony, will it not be possible to skip ahead in these other critical infrastructure areas?

    A few weeks ago we launched my new book: Precision: Principals, Practices and Solutions for the Internet of Things in London on the River Thames. The book is written for anyone who wants to be a student of the subject, whether you're a focused on technology or business.


    The first part of the book divides the technology principals into five major areas. We discuss the things or machines themselves, how they are connected, what is done to collect information, how you can learn from things and finally what can be done with what we’ve learned.

    While many are implementing IoT solutions using current technology, it should be recognized most of the technology to date has been built for Internet of People (IoP) applications. But things are not people. For instance, there are many more things than people, things can be where people aren’t they have more to say, things talk much more frequently and things can be programmed, people can’t. While there are numerous technology challenges and opportunities within successfully implementing industrial IoT solutions, this distinction has great relevance to those enterprises that build machines (e.g., gene sequencers, combine harvesters, wind turbines) and finally on those that use these machines (e.g. hospitals, farms and utilities).

    The second part of the book contains fourteen case studies that span the major industries of power, water, healthcare, transportation, oil & gas, construction and agriculture. You'll meet Nick August, who is a farmer on the Cotswalds, learn about how an autonomous train will run from the north of Australia to Perth this year and how you can use machine learning to predict electric grid failure.

    Some companies have already begun to make the investments in industrial IoT. GE Software, for instance, was founded in 2011 with a $1B investment. CEO Jeff Immelt has declared that GE needed to evolve into a software-and-analytics company lest its machines become commodities. Immelt has set an ambitious target of $15B in software revenue by 2020. PTC has taken an M&A path and invested over $500M in a series of companies, including ThingWorx, ColdLight and Axeda. On the venture side, you may not have noticed but Uptake, a Chicago-based IoT startup, beat Slack and Uber to become Forbes 2015's Hottest Startup. They raised $45M at a $1B post funding valuation.

    I’ll let you be the judge of whether it’s time to invest in IoT. But whether you’re a student at Berkeley, someone who works for an enterprise tech company, a venture capitalist, a CEO of a textile machine company, or the Chief Innovation Officer of a hospital, I’d encourage you to make Precision: Principals, Practices and Solutions for the Internet of Things part of your summer reading list and start exploring how you’ll be part of creating a more precision planet.


    Timothy Chou, Lecturer at Stanford University; Chairman, Alchemist IoT Accelerator; Former President of Oracle on Demand

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1070144 2016-07-05T21:31:38Z 2018-01-19T03:31:36Z Use Hacker News to Source Engineers

    Hacker News can be a great source of finding engineering talent for your company. Here are few ways I have found on HN to source great talent for my own startup:

    Ask HN: Who is hiring?

    “Who is hiring” is a monthly thread where companies can post technical job openings free of cost. A new thread is featured on HN homepage on first weekday of every month. For example, this is the “Who is hiring” thread for July 2016.

    You should also check out a this cool interface for Who is hiring threads byMicah Wylde.

    Ask HN: Who wants to be hired?

    Unlike “Who is hiring”, where companies post job opening, “Who wants to be hired” is a monthly thread where active job seekers post about themselves. Majority of job seekers are remote workers but you can also find candidates who are willing to relocate.

    Here is the google link to find past threads for “Who wants to be hired?”

    Ask HN: Freelancer? Seeking freelancer?

    This monthly thread is dedicated for freelancers only. Here is the google link for past threads.

    Bonus tip: follow “Show HN”

    Show HN is a place where hackers post their interesting projects and showcase their skills. Check that space regularly to connect with smart people who are working on technologies relevant to your company.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1055239 2016-05-24T16:46:12Z 2016-05-24T17:06:58Z Why Startups Fail
    “90% of startups fail.”

    You’ve probably heard that before. But what does it mean?

    Over the past couple years, I’ve :

    • been the founder and CEO of multiple startups
    • raised money
    • been acquired by a public company
    • participated in the world’s top startup accelerator programs,
    • failed and watched others fail
    • succeeded and watched others succeed
    • and ate a lot of ramen noodles #truth

    Given my experiences, I thought it would be valuable to share my views on why startups fail.

    If you understand why startups fail, you will be more likely to succeed.

    In school, we’re taught history to avoid repeating the same mistakes. Similarly, as entrepreneurs (practicing or aspiring), we should understand why startups have failed so we can decrease our own chances of failure. After reading this, you will understand the main reasons startups have failed in the past, making you more likely to succeed.

    Defining Failure

    Startups fail when they can no longer operate -> Startups can't operate when they run out of money.

    Understanding this may seem basic, but it’s important. I’ve heard many times that, “the reason a startup fails is because they run out of money.” That’s not a reason. That is the result.

    Failure = No Money.

    If we can agree that in most cases startups fail because they run out of money, then to truly understand startup failure we need to understand why startups run out of money. Make sense? Great, let’s dig deeper.

    Top 3 reasons why startups run out of money

    Lucky for us, all we need to know is the top 3, because those 3 reasons account for over 80% of startup failures. I definitely just made up that statistic, but it’s probably in that ballpark.

        Reason #1: Building something nobody wants

    Over the years, it has been clear that if a startup doesn’t build a product/service that people want, they will not be able to generate revenue.  

    Revenue = money; no revenue = no money; no money = fail.

    In one of Paul Graham’s famous essays, he wrote about this topic and why startups need to “make something people want” (http://paulgraham.com/good.html). It seems so obvious, but in reality it’s not.

    Entrepreneurs need to think differently and see the future. While doing this, many assumptions are made because there isn’t enough information to make decisions - if there was enough information, someone else would already be doing it. One of the worst assumptions entrepreneurs make is that people will want their product. The problem is that this should not be an assumption, instead, it should be a hypothesis. Having a hypothesis that people will want your product means that you need to prove it. The biggest mistake entrepreneurs make is: they don’t prove people want their product. What ends up happening is founders skip this step and go directly to building products, hiring people, finding partners, then trying to sell. “Trying” is the key word here, because after they realize they can’t sell, it’s too late and they’ve run out of money.

    Learning Point #1: Prove that people want what you’re building. 

    Before building anything, prove to yourself and your team that people actually want what you’re building. A trick I’ve learned over time is to start with designs. Create your designs on Photoshop or Sketch and use a tool like InVision. This will help you simulate your product without having to write a single line of code. It’s easier, faster, and cheaper to iterate on designs than code.

        Reason #2: No Focus

    From my experiences founding and mentoring dozens of startups, I’ve seen that focus and prioritization are necessary to achieve success (and avoid failure). Again, doesn’t this sound obvious? It’s not. In a startup, you’re being pulled in all different directions. Founders think they have to do everything at once. They are meeting investors, partners, mentors, customers, building products, figuring out a marketing strategy, going to all the conferences, and blah blah blah...

    In reality, there are only 1-3 things at any given time that actually matter. Ideally, you’ve identified and prioritized those things, then distributed the responsibilities across your team. Time is against startups, so it’s important to focus on what matters and optimize your time. Many startups make the mistake of prioritizing raising money from investors. This is because that’s what everyone else is doing and it seems like the cool thing to do. They end up wasting so much time because the company isn’t ready to raise money. Either they don’t have a good product or have low traction, and often they don’t know why they’re raising money in the first place. In the end, they waste months talking to investors, and in that time they could have been proving that people want their product, building it, and selling it.

    Learning Point #2: Prioritize, then focus.

    Figure out what are the most high value areas you need to focus on. Here’s a prioritization order that applies to most B2B startups:

    1) Prove people want what you’re building

    2) Build it

    3) Get early customers

    4) Raise money

    5) Hire smart people

    6) Sell to more customers

    7) Raise more money

    8) Hire more smart people

    9) Make your product better

    10) Sell to more customers

    At any point, you should know what stage you’re at, and therefore, what you should be spending most of your time on. This focus will lead to stronger execution and catalyze your growth. Without focus, a lot of money will be wasted and chances of failure will be higher.

        Reason #3: No Passion

    A lot of people have this notion that starting a company is the dream. It’s no surprise given all the recent exits and IPOs. Startups have become sexy. As a result, I’ve seen many people start a company because they think they’ve stumbled on a great idea. Heck, I even did this back in university.

    Whenever I meet a founder, I ask: “why did you start this company?”. This is the single most important question I’ve learned to ask founders. If you asked me that question when I started my first company, I would have said, “because I think it’s a good idea and the market is huge!”. The problem is, I had no passion. That company failed. There was nothing driving me behind the idea. Similarly, many startup founders I meet have no real passion or a deeper reason why they started their company.

    If you’re starting a company without passion for the problem, then during the hard times you will be less motivated to power through them, and your chances of failure will be higher.

    Learning Point #3: Do something you’re truly passionate about

    I heard this saying somewhere: “Attitude is Altitude”. In my personal experiences, I’ve found this to be true. When you’re faced with hardship, either professionally or personally, staying positive will always increase your chances of success. It’s easy to get mad, depressed, and/or stressed, but try to control your emotions and stay positive by remembering why you started in the first place.

    Having real passion is essential to get through hard times with your company. To get through the hard times, you need motivation. I’ve found that passion is the strongest motivator. When founders are extremely passionate about the problem they’re tackling, they figure out how to solve the issues at hand. The best motivators I’ve seen are:

    - The founder(s) experienced the problem themselves

    - The founder(s) believe in a future that may not exist unless they create it

    - The founder(s) have close family and friends that have been affected by the problem

    Putting it all together

    Whether you’re working for a big company, thinking about starting a company, or already founded a startup, it’s worth reflecting on the lessons we have learned from past failures.

    1) Build something people want, and prove that they want it.

    2) Have focus at all times by prioritizing high-value initiatives.

    3) Be real with yourself and do something you’re truly passionate about.

    The interesting thing is, these 3 areas also apply to big companies. But, instead of the companies failing, individual products fail. There are multiple examples of products failing in big companies because they didn’t build something people want, or they lost focus. Learn from the past, make new mistakes, and remember, "Attitude is Altitude".

    Lastly, Snapchat.

    I’ve found that Snapchat is a great way to talk about these topics. Everyday I try posting interesting content on my Snapstory. Don’t wait for my next post on LinkedIn, follow me on Snapchat. Add my username: nav1d

    By adding me on Snapchat, you can watch me talk about a variety of startup topics. In the past, I’ve talked about Marketing & Sales Tactics, Raising Money, and Staying Motivated. Add me and share with your friends and coworkers.

    #learnfromfailure #startups #innovation #product #studentvoices #leadership #entrepreneurship #businessstrategy #bigideas 

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1049884 2016-05-11T16:55:45Z 2016-10-27T18:03:11Z Picks — What I’m Spending Time on Now

    I’ve been having a blast since we sold StackStorm to Brocade.

    As promised in my last post (the 4Ps of Picking), in this post I’d like to share with you a little bit about what I’m seeing in the market.

    Like many, I see a greater gulf than ever between the frontier of what is possible and the performance of the average enterprise. You can see this gulf when you measure metrics in terms of operational agility — such as deployment frequency or deployment lead time (time spent in the queue before production).

    And you can see the gap in outcomes in studies such as the Puppet Labs sponsored State of DevOps survey here:

    http://resources.idgenterprise.com/original/AST-0147237_2015-state-of-devops-report.pdf

    One of my favorite (hello StackStorm and auto-remediation!) is that the MTTR for super high performers is 168x faster than average performers.

    So with that as context, here are a few of the spaces into which I’m looking:

    Storage:

    Given my background having helped create the open storage and software defined storage space, storage is a natural for me albeit one that is under incredible pressure and stress these days in part thanks to too much venture investment chasing what is a large but mature market. I have a bunch of friends and colleagues in storage and am confident in my picking skills in this space.

    Cloudian:

    I’m really proud that Cloudian has invited me to join their advisory board.

    Cloudian has a unique offering in the storage space — it is a massively scaleable 100% compliant on-premise S3 cloud that includes far better metadata than does S3 for use in management (thanks in part to an early bet on AWS and Cassandra). They are achieving great outcomes for their customers both by saving them money on object storage (speeds, feeds and dollars per GB!) and, more importantly, by improving the productivity of IT teams all the way up to and including the development teams.

    They have spent literally years perfecting their object storage with customers like NTT hosting and tier one financials. And now the word of mouth is spreading.

    Cloudian is a much later stage company than some of the others I advise. It’ll be in the news quite a bit in the weeks and months to come thanks to their well deserved accelerating momentum.

    System Z:

    This is the first of a few stealth mode start-ups I am advising. This one is looking at the coming impact of 3D memory. I cannot reveal much other than to say that putting many many TBs of non-volatile memory next to the CPU at nearly memory speeds is insane and wonderful. By the time this company emerges I’m not at all sure it’ll be seen as a storage company; storage as a space has been utterly transformed and yet storage companies are too often in my opinion stuck in the speeds, feeds and $/TB mindset of the early 2000s.

    Machine learning and data science:

    This is an incredible area to learn about. There is so much hype and yet also it goes without saying that some of this deep learning stuff is getting awfully useful. I am not an expert here, unlike storage, and yet I’ve made it an area of focus in my networking and learning. I’m starting to grok the various camps in machine learning in large part with the help of many of the companies I mention below. I’m also getting hands on with my limited Python chops. Fun stuff.

    My sense is that those companies that best focus their AI or machine learning on specific pain points will flourish and that many of the opportunities for platform companies that provide for example “data science as a service” have faded away.

    With that in mind I’m extremely excited to be supporting TextIQ. Apoorv, Omar, and the entire team at TextIQ are harnessing cutting edge machine learning to address some real pain points in the legal industry. They have tremendous traction and when you meet Omar and see the demo it is easy to see why — clarity of vision, tremendous energy, high CPU, and yet active listening and more. This a rocket ship on the launch pad; yes — slightly hyperbolic and yet I could not be more bullish on their prospects.

    They are hiring — and picking their next handful of proof of concepts and production deployments as well. http://textiq.com

    I’m also working with Andy and Xavier at Data Fellas. This team has a track record implementing data science pipelines for some of the larger users in Europe and are leveraging this experience to build related software. They are also prime drivers for the now widely used Spark notebook. You can see Andy’s activity on GitHub here: https://github.com/andypetrella

    As the name DataFellas and the tag line “we make offers to data they cannot refuse” both suggest, these guys are fun and a little bit irreverent. More importantly, each time I chat with them I come away more impressed by their understanding of what it is like to deliver an distributed data science pipeline to enterprises. They have spent so much time helping actually drive outcomes for customers that they truly feel their pain.

    DataFellas are close to getting their product out in alpha / beta form — and in the meantime are doing workshops with folks doing data science at cost in return for getting additional product feedback. Back in March O’Reilly picked them to do their on-line training “Building Distributed Pipelines for Data Science using Kafka, Spark, and Cassandra” — so their expertise speaks for itself. Get in touch with them now — Andy is speaking in NYC this week and is scheduling chats and at least one training now: http://www.data-fellas.guru

    In both cases, as you dig in, you’ll find incredibly energetic teams that have survived rigorous PhD programs and are now doing the real work of building great companies. I’m hugely proud of the progress both teams have already made.

    Somewhat in the space as well — although not yet deploying machine learning — is CareerWave. At the highest level CareerWave is sort of like uber for career and business coaching. However it is more than that — we are all told these days to “own our own career.” Ok, but how? Not everyone can afford thousands of dollars a month for a coach and yet study after study suggest that coaching helps lead to happier and more successful people. And maybe more importantly for companies, unhappy people under perform and eventually leave. What if we can apply software and machine learning to the problem? That’s the gold standard of coaching, and it’s CareerWave’s approach — they are signing up betas now and also coaches.www.careerwave.me

    There is yet another company in stealth mode that is looking to leverage machine learning for support related tasks. Stay tuned.

    DevOps Automation:

    • System X
    • System Y

    Yes, sorry, these are two stealth stage start-ups. Each of them intends to help enterprises better measure and automate their operations — and so at a high level they may seem like the Nth monitoring or orchestration or continuous delivery solution. And yet, each are different in part by explicitly focusing on enterprise adoption as opposed to primarily on community usage. The DNA of these companies, much like StackStorm, merges deep DevOps experience with company building and enterprise operations experience as well.

    The founders of both of these systems are already gathering around them an incredible team and some great early adopters as well. I’m bullish on both. And I will share more as their founding teams are ready for me to do so.

    Other:

    I’m now spending about half of my time meeting new companies, attending meet-ups and so forth. The other half is split between helping existing companies and doing some hacking and preparing for various Spartan races.

    A couple of other machine learning related companies I’ve just gotten to know are again characterized by brilliant technical teams that are drilling into specific pain points. I think the entire team at Alchemist Acceleratordeserve a lot of credit for helping these teams iterate towards product / market fit quickly — while also shared a lot of otherwise very hard earned knowledge about company building. While I’ve just gotten to know these companies, I think they are both interesting:

    • DataCulture — here Karthik and team have drilled into a specific pain point in ecommerce that they are addressing with AI powered software and services. They are about 5 days away from revealing their MVP here:http://supply.ai
    • Relato.io — Russell is a well known agile data scientist — after all he wrote the O’Reily book of that name — with a track record building out such capabilities at LinkedIn and elsewhere. He’s now applying and extending his capabilities in order to drive waste out of the sales and business development processes. http://www.relato.io/index.html

    If you are interested in someone like me helping you out — or at least hearing you out — please do get in touch. My network of friends and of people that seem to trust me has expanded quite a bit over the years. I’m looking for founders and later stage companies that could use my particular insights, relationships, and drive.

    Speaking of drive, one thing I’ve learned since selling StackStorm is that I’m definitely not done yet. I’m having a blast and feel every bit as competitive as I ever have.

    Community hackathon:

    Last and likely least I’m also shooting for some upcoming hackathons to test and stretch my Python skills. Here I’m most interested in apps that help support community engagement and that shine a light on our governments. The deeper I dig into my local government the more I see the need for transparency and innovation.

    I’m also proudly volunteering time as a member of the Vestry at St Matthew’s Episcopal in San Mateo. It is a warm and welcoming community with inspirational leadership.

    My ask for you is — what am I missing? What do you think about my areas of focus? If you were me, what would you do differently?

    Please keep in touch.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1045755 2016-05-02T21:16:04Z 2016-05-24T16:50:20Z 3 Reasons to Scrap Your Startup

    Contrary to common belief it’s not poor market timing, aggressive competition or a lack of ability to raise capital that kills the bulk of startups. Rather, according to CEOs of failed startups, it’s a lack of market for their products. That’s right—all too often startups burn through their funding, iterating on their big idea, without validating that it solves a problem at a price customers are willing to actually pay. In the enterprise, this is even more critical as early adoption needs to be closely matched with the proper pricing structures.

    But even if you’ve hit on a true need in your market, there are still a number of other pitfalls that can be hard for first-time entrepreneurs to avoid. Three of the most common reasons I see enterprise products and start-ups fail include:

    1. Low customer adoption/use. If it takes too much time to onboard, doesn’t resonate with CIOs or your target buyer (which could be the head of marketing, sales, finance, HR) or is too cumbersome for employees to use, it won’t gain traction.
    2. Product is not working as intended. Customers may have initial patience for a few minor bugs, but ongoing problems requiring significant rework can sink your company. This is especially true in the enterprise market, as your product outage could cost your customers thousands or even millions of dollars.
    3. Doesn’t address a top problem of your target customer. No matter how amazing your product is or how well it solves your customers’ problems, most companies only have enough budget to address their top two or three pain points. Creating robust buyer customer personas ensures you’ve done more than just scratch the surface of their true organizational needs, allowing you to prioritize your product roadmap accordingly.

    The Road Map for Ensuring Startup Success

    Communication is key. At Norwest Venture Partners, we’ve found that it’s important for enterprise companies to start by creating a customer advisory board and involving them in the development of each new product or product iteration. Test and obtain feedback from them in real time, as they use the product and test out your demos, and do a weekly gut check to evaluate how sentiment is trending. Start small and work out the kinks before scaling up to your overall customer base.

    By involving your customers in your product iteration, they become more invested in your success. In turn, that means they’re more likely to give you the level of rich feedback you need to take your product to its next level and win over your market.

    Some founders worry that they can only keep their clients happy by delivering every product iteration they request, but that’s not the case. If you involve your customers in your product development process, they will see the issues you encounter along the way, and won’t be surprised if it doesn’t ultimately work out. Focus on how you can get them excited about helping to define the roadmap–which may include scrapping some products that won’t keep your product on the path to success and longevity. Your customers aren’t just buying that initial product you have on offer. They’re buying your long-term vision too.  

    If you’re concerned that scrapping a feature too soon is going to sink your company, consider the alternative. What if you hold out hope for six, nine or even twelve months and the end result is still the same? By failing to take decisive action, you’ve now wasted resources, money and customer time on feedback for your doomed product. This misstep can put you at a disadvantage to your competitors and even cause you to lose some great people who wonder why you let them sink so much of their time and creative energy into a project that had little hope of seeing the light of day.  

    Identifying the Right Market to Disrupt

    To be successful, a startup must build products that solve real problems the right way.

    “You have to look for new enabling technologies, or major trends, like fundamental trends, that create a wide gap between how things are done and how they can be done,” said Aaron Levie, CEO and co-founder of Box, in his Building for the Enterprise lecture. “Looking back in time to our business, the gap was basically storage was getting cheaper, internet was getting faster, browsers where getting better yet we are still sharing files with this very complicated, very cumbersome means. Anytime, between the delta of what is possible, and how things work today is at its widest. That is an opportunity to build new technology to go solve a problem.”

    But even great ideas can fail. So how can you recognize when you’re actually on to a billion-dollar valuation-creating product? In my experience, immersing yourself in your customer’s world is the best way to gain the awareness to spot the real opportunities for market disruption.  For instance, it’s unlikely that Marc Benioff would have had the inspiration, confidence and vision to have moved CRMs into the cloud with the founding of Salesforce without his years of success at Oracle. As Benioff counsels in his book Behind the Cloud,  “Don’t be afraid to ignore rules of your industry that have become obsolete or that defy common sense.”

    Although some outsiders have a knack for coming in without prior industry experience and hitting the ball out of the park, most successful startups are founded by someone who is obsessed with creating a better customer experience, who understands the industry’s pain points and daily challenges inside and out. If you can tap into the issues that are driving your customer crazy and causing them to lose sleep while efficiently solving them, the market is ripe for your taking.


    - Written by Sean Jacobsohn, Cloud VC | Partner at Norwest Venture Partners

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1046369 2016-04-29T19:56:52Z 2016-05-24T16:48:44Z Learn forward: 4Ps for Picking Better Than a VC

    This post is, like many a blog, written largely as a bread crumb — a way to track my thinking. In the weeks since closing the sale of StackStorm to Brocade I’ve set off on a great adventure — getting to know many more entrepreneurs and investors while attempting to sharpen my understanding of relevant domains and technologies.

    My goal is simple — I want to learn to pick opportunities better. And while doing so I want to help entrepreneurs and learn a lot.

    This blog covers the discipline I’m attempting to follow in evaluating opportunities. My next blog will cover some of the opportunities I’m uncovering.

    Picking:

    Josh Kopleman from First Round (@joshk) has a great series of tweets recently on the importance of picking for entrepreneurs as well as investors. One of my favorite tweets:

    Yes, +100. So how does an entrepreneur pick?

    (Please, please correct and expand my thinking here.)

    1. The $1bn bar. Michael Porter in effect.

    The trick is to find opportunities that you *know* can create a space or at least become a winner in a space that is large enough that you’ll be worth $1bn with growing revenues in less than 10 years.

    OK, once again, how? How do you make that determination? In my case, I write-up 5 forces frameworks. And I have a lot of question marks in the key areas that I seek to fill in through conversations and education. I’m hopeful that these write-ups will themselves become breadcrumbs that will help me and the entrepreneurs I’m supporting.

    I tend to drill in on ecosystem and community dynamics because I’ve been somewhat successful in understanding and leveraging these areas. I am extremely confident in my ability to see how hard or easy it will be to get a community and a channel going.

    And here is one spot where a VC — who has lots of advantages versus me in picking including an infinite network — does not have something I do have: years of experience in actually doing the work. It is easy for me to go from a) potential space to b) community dynamics to c) relevant partners and d) a team than someone who is looking at many, many opportunities.

    The judo I typically try is to define a space and to start to market that in my discussions with potential teammates, investors and users. Also something that has been helpful for me in the past is to think about a tag-line for the space — think of the space itself as a product worthy of positioning.

    Once you find such a space — one that you can both help create and that you are confident is worth billions — then claiming leadership of it is pretty straightforward. Think software defined storage and Nexenta or event driven automation (still young) and StackStorm. We were able to seize leadership of those spaces (for better and worse) because I had helped to create them.

    2. Personas

    While arguably you could subsume a focus on personas as one part of the 5 forces framework, I choose to break these out.

    A focus on who are the users, where do they hang out, what do they believe, how are they changing is all important. This does not necessarily mean that you need to be one of them. However you do need to know the secret handshakes. Only by getting inside their head can you become the natural choice for them.

    Yep, I’m talking design from the get go. If an entrepreneur pitches me an idea and yet does not engage with me on who exactly is the user and how is that profile changing over time, well, at the very least they need a lot of help.

    I’m working with one company that has recognized that developers have become all important to their adoption. And yet they have not yet unpacked what that really means for the self adoption journey from hearing about them through initial usage and support and so forth.

    3. People

    At this stage of my career it almost goes without saying however the people need to be people I want to spend years with -> I’m going to help them achieve their dreams, will I care about them, respect them, go the extra mile for them and with them?

    Also, not quite the same point, but the more I do this the more I understand the importance of taking the time to shake and grow the network to find the penultimate list of experts as teammates and as initial users. If I were thinking about a start-up focused on public government I’d be looking to get on the President’s calendar. And if you cannot get to that level then something is wrong either with the idea, your pitch and positioning, or — your passion.

    4. Passion

    At some point something should click. For me I imagine betting absolutely 100% of everything on the idea, including the next 5 years of my life. Will I bet my daughter’s college fund on this idea, team, and opportunity? If so then I know I’m onto something worthy of all out effort. If not, then I owe it to myself to not dive in and to help the entrepreneurs see what at least for me is missing. As an aside — note to self — if I don’t chase at least a small percentage of the entrepreneurs away by being too direct and candid, then I’m being too nice and wasting everyone’s time.

    For those following closely you might have noticed that this boils down to 4Ps: Porter (i.e. the space and 5 forces), Personas, People (focusing on the team and early user)and Passion.

    In the next post I’ll highlight a few of the spaces I’m learning about and companies I’m helping or at least trying to help.

    As a bit of foreshadowing, I’m trying to improve my extraordinarily rusty coding skills — doing some python hackery — and am fascinated by opportunities being created by machine intelligence, serverless computing (and other aspects of the AWS effect), non volatile memory, and more. I also think DevOps has a long, long way to go before becoming mainstream, which is both a shame and a huge opportunity. And I’m wrestling in a few cases with whether a company should focus on picks and shovels or whether they should be mining the gold themselves.


    - Written by Evan Powell, Founding CEO of Stackstorm and Nexenta, and Advisor / Angel investor in a few Alchemist companies including TextIQ and Data Fellas.

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